Renting with Airbnb can be lucrative

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.

Housing limitations

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.