Does Airbnb deserve one star for its pull on Bay Area housing?

San Francisco-based start-up Airbnb might be adding — if ever
so slightly — to high city rents and home prices, according to a
recent study.

The report by the Economic Policy Institute (EPI) concludes the
home-sharing platform pressures already tight housing markets —
and even a relatively few units in a community can drive up home
and apartment prices.

Josh Bivens, research director at EPI and author of the report,
said Airbnb had a small but measurable effect on home prices in
other cities and likely in the Bay Area. “They push up home
prices,” Bivens said. “It’s pushing up rents.”

Airbnb countered that it creates income for homeowners and taxes
for municipalities. It criticized the studies for flawed data and
poor assumptions.

“Airbnb has worked with hundreds of governments around the
globe to develop new regulations to regulate and recognize home
sharing as well as to collect and remit hotel and tourist taxes,”
the company said in a statement. “Governments are eager to find a
solution that creates economic opportunity.”

The study comes as lawmakers debate causes and solutions for the
Bay Area housing shortage threatening the region’s strong
economy.

Airbnb has come under more scrutiny by researchers and public
officials grappling with the crisis, even as the company
anticipates going public and expanding its reach.

Apartment prices in the Bay Area rank among the top in the
nation. In San Jose, a typical two-bedroom rents for $2,630, an
increase of 3 percent from last year, according
to Apartment List
. The median price for a two-bedroom in
Oakland is $2,240, down slightly from last year, and in San
Francisco its $3,096, up 1.8 percent.

The study released in January by EPI, a progressive think tank,
echoed other academic surveys based on public data examining
Airbnb’s effects on housing markets. The EPI study looked at
benefits and costs of Airbnb and argued the company should pay more
taxes and face more local regulation.

Airbnb settled a suit in 2017 with the City of San Francisco
over tighter regulation and registration of home sharing hosts.

Bevins cited a study that suggested Airbnb rentals increased the
amount of rent paid by a typical New York City apartment dweller by
$384 a year, or 1.4 percent, between 2015 and 2017. Other
researchers found doubling of Airbnb activity in a small New York
neighborhood boosted home sale prices between 6 and 11 percent.

David Wachsmuth, research chair in urban governance at McGill
University in Montreal, said other researchers are coming to
similar conclusions about Airbnb’s upward pressure on housing
prices.

Wachsmuth found that between September 2014 and August 2017 in
New York City, Airbnb contributed to the loss of as many as 13,500
units from the long-term rental market. The platform also sped up
gentrification in some historically black neighborhoods, he
said.

Wachsmuth said several studies have found that Airbnb has
increasingly become a competitor for long-term rentals, as
commercial operators on the platform convert more apartments into
online rentals.

Companies managing multiple short-term rentals, Wachsmuth said,
are “a growing share of the pie in the Bay Area.”

Airbnb criticized the studies for flawed data and assumptions
and said several were funded by the rival hotel industry. It said
the New York City housing market is different from the Bay
Area.

The company said it has worked with local governments and paid
taxes in more than 23,000 jurisdictions since its founding in 2008.
It pointed to an Airbnb host’s ability to earn money and be a
“means to pay their bills and avoid eviction or
foreclosure.”

The company said another study, funded by the hotel industry,
found Airbnb leases will raise the median rent in New York City
just $33 during the next year.

The company has also supported various local and national
initiatives to fight homelessness and reduce housing construction
costs.

Steve Levy, senior economist at the Center for Continuing Study
of the California Economy, said the main factor driving higher
rental costs is lack of supply. The region has failed to build
enough apartment buildings — and homes — for years while the
Silicon Valley economy has boomed, he said.

“Rent increases are the direct result of the shortage,” Levy
said. The high cost of land, zoning requirements and fees has made
it difficult for builders to add high-density housing in key
corridors, he said. “It doesn’t pencil out.”

Source: FS – All – Real Estate News 1
Does Airbnb deserve one star for its pull on Bay Area housing?