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Airbnb is doing to the rental market what Uber has done to on-demand transportation, and what social networks have done to human relationships, namely inserted itself as a middleman profiting on the exchange of its users. What Airbnb does is turn everyone with an empty room into a landlord, while allowing existing landlords to rent their units in smaller time increments and at a higher cost per increment. While this encourages a more efficient use of housing resources, it also has the consequence of reducing the number of long-term rentals on the market at any given time, in spite of the fact that there are certainly landlords who will only rent out rooms short-term and/or intermittently, who did not rent rooms long-term (month-to-month or yearly) before. The Airbnb model is nothing new. In tourist towns, this type of rental has always been available, via a sign posted outside an apartment or on Craigslist.
Frequently, landlords in tourist markets will post two rates: daily and weekly during the holiday season, both at a premium above long-term rental rates. In the off-season, these rates go down and ideally landlords hope to secure a “long-term” tenant who will stay until the season begins again, whereupon the lease will end and tenants will have to find new lodging. This formula works best in tourist towns with a university: student rent during the school year and tourists during the summer season. In major cities, it is always tourist season for someone, and landlords who used to rent at long-term market rates can now make more money renting short-term and intermittently without any of the duties or obligations of having a long-term tenant. This reduces the number of available, long-term rentals on the market, leading to increased housing insecurity and cost for residents who rent. Indeed, some individuals who can’t find affordable housing, may find themselves bouncing around from one-short term Airbnb rental to another, and while this may also have been the case before, with short-term sublets, the problem is exacerbated by the proliferation of Airbnb landlords.
Airbnb may also contribute to an increase in rents by motivating tenants to rent more expensive units with the plan of offsetting their rent through the premium price short-term Airbnb rental of additional rooms. Also, homeowners may be encouraged to buy expensive homes that they can’t really afford in the hope that they can rent out one or several rooms throughout the year to defer costs. And while this is already common practice among new homeowners in California, who shift the cost of part or all of their mortgage onto long-term tenants to keep their homes (which they often can’t afford based on their income), Airbnb turns this practice into a short tenancy premium price hotel model. What before was an informal economy of short term vacation rentals, has become a third-party global platform that is designed to secure the most economic yield from a property through reduced and more frequent rentals to different tenants at increased prices at the expense of long-term tenants.
Cities have responded to this latest incursion of platform capitalism into the rental and housing market in different ways. Santa Monica has banned short-term rentals of less than 30 days when the owner is absent. Note that this prevents competition with the local hotel industry, keeps informal hotels from operating in single-family neighborhoods, and allows homeowners who are present to continue to subsidize their mortgages. In other words, it shields local property owners from the negative effects of Airbnb, while allowing them (and leaseholders) to still benefit from the platform via increased rents both in the long and short term. Meanwhile, San Francisco has permitted the rental of rooms or apartments for up to 90 days when the owner is absent, which is an arbitrary non-solution to the housing problem in that city. This overturned a previous ban on residential rentals of less than 30 days in multiunit buildings. Again, 90 days allows homeowners and/or leaseholders to make more than they would by renting out long-term.
It seems that due to the high cost of housing in California, homeowners and leaseholders are increasingly using Airbnb to become landlords. Airbnb contributes to the upward pressure on rents by allowing homeowners and long-term leaseholders to shift the burden of their own housing costs onto others, while making rentals more short-term, which reduces the amount of housing available for future long-term renters. This perpetuation of the homeowner/landlord cartel model only exacerbates the housing crisis. After all, we can’t have an economy based on everyone renting and subletting apartments and rooms. For an economy to function, something of value has to be produced by someone, and those engaged in productive work have to be paid fairly. Ultimately, for citizens to have an affordable place to live, we need to build more housing and we need to build it now.
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