In just over a decade, short-term rental company Airbnb has redefined the way Americans travel and lease their properties.
Yet the Economic Policy Institute cautions against looking at Airbnb’s potential for moneymaking without a healthy dose of skepticism.
A new cost-benefit analysis of the impact of Airbnb-like short-term rental services shows the economic costs likely outweigh the benefits, according to the Washington, D.C.-based think tank.
The institute analyzed housing costs, taxes and renter behavior as well as impact on adjacent industries.
It concluded Airbnb-style rentals should have to “play by the same rules” as the rest of the lodging industry.
In an op-ed for The Hill, the institute’s report author, Josh Bivens, described short-term rental companies as a benefit for a few that essentially amounts to a way around regulations that apply to many.
The biggest, and potentially most troubling, finding in the Economic Policy Institute’s cost-benefit analysis is Airbnb’s effect on long-term rental housing availability.
The analysis found multiple cities in which property owners spurred increases in long-term rental prices by moving housing stock into the short-term rental market.
For example, the institute said Airbnb’s introduction drove up average rents by nearly $400 a year in New York.
“It would encourage owners and operators to be a little bit more aggressive on the pricing front simply because the consumer would have fewer choices when looking for long-term housing,” said Greg Willett, chief economist for Richardson, Texas-based property management business RealPage.
Furthering wealth concentration
As property owners shift housing from long-term to short-term travel lodging with services such as Airbnb, travelers looking for a place to stay benefit from more choices and potentially lower costs. However, the report points out that housing wealth is not distributed equally.
In Dallas, white residents make up a smaller part of the population but occupy almost all of the upper-income housing.
Communities of color are often concentrated in low-income neighborhoods, which aren’t as likely to benefit from the short-term rental industry, Willett said.
“As you get down into lesser quality rental properties ..., you would have fewer units taken out of the marketplace.
At the same time, taking out those lesser quality options would have a bigger impact.
That’s where there are product shortages here and everywhere across the country,” Willett said.
Harming city revenue
Another detriment described in the institute’s report is the effect a lack of taxation can have on cities where Airbnb-type rentals are expanding.
Cities typically impose fairly steep taxes on hotel lodging — the industry being upended by the rise of Airbnb.
Those tax dollars serve as a way for cities to generate money from travelers visiting their cities.
“If the apparatus for collecting taxes from Airbnb or its hosts is less well-developed than the apparatus for collecting taxes from traditional hotels, this could harm city revenues,” the institute said in a statement.