We now live in a world where one societal advance creates a new series of problems we never anticipated. This time its Airbnb’s turn to take a wack at the piñata. The popular home-away-from-home website is choking the housing market,
As an avid Airbnb fan, I didn’t realize how my support was actually self-sabotaging. The issue was first presented to me by my friend Vik who lives in Barcelona. If you’ve been to Barcelona, you know it’s a very bustling, happening city and obtaining a flat to rent there is no easy task. I didn’t realize, however, that the situation has gotten much worse due to the fact that Airbnb is drastically impacting the supply of available homes.
As we know, money talks. And Airbnb has changed since it’s hatchling days of mom and pop bed and breakfasts. It’s now a multinational enterprise worth $30 BILLION dollars. Long gone are the days of shared mattresses in San Fran, where the business got its start.
This change became obvious during my trip in Barcelona where I stayed at an Airbnb that was taken care of – not by the owner – but by a company that is tasked with taking customer’s complaints and changing dirty towels. It’s now become a mega-business, with people working the system to get more money.
Let me explain further.
What happens when you take a city like Barcelona and fill it with 9 million rich tourists a year? Investors’ eyes become filled with dollar signs and, subsequently, Airbnb becomes the new medium through which they wield their money weapons. Generally, people in Spain don’t earn much. The cost of living is low, so the salaries are low, so the rent is low. You know the drill. To give you some perspective, it’s not unusual for a doctor or engineer to average 30k euros a year. Yes, that’s a 3-0.
Knowing all this, you can imagine that rent for a decent flat in Barcelona, the second most expensive city in Spain, doesn’t typically cost more than 1,200 euros a month. If it cost much more, no one could live!
So here’s where things get all twisted.
Those lucky few with fat piggy banks invest in a home that, once upon a time, used to go to normal renters. These flats are instead being used by Airbnb visitors who make a lot more money than Spaniards and can afford to pay prices that would seem astronomical to a local.
For more context, I paid over $100 a night for the place we stayed. The flat is likely booked the whole month, or close to it, so they will average $3,000 a month. Compare that to the average rent of 800-1200 euros a month, and you can see why homes are being pulled off the long-term market.
Besides decreasing housing options, it’s also affecting the cost of rent and even buying a home. So much so that locals are now pushed out of city limits and living further and further away. As I drove my mom to the airport, I saw people commuting in morning traffic that I suspect takes hourS. Catalan people can no longer afford to live in their home city and instead are forced to dance around the outskirts to survive.
Unfortunately, it’s not just Catalan people. This is happening all over the world, including the US. A recent article talks about a study done that correlated the rise in housing prices to Airbnb listings.
Researchers looked at rents and home prices in the 100 largest metro areas in the U.S. between 2012 and 2016. They found that a 10% increase in Airbnb listings leads to a 0.39% increase in rents and a 0.64% increase in house prices.The Wall Street Journal: How Airbnb Affects Home Prices and Rents
“That may sound minuscule, but between 2012 and 2016, rents rose by about 2.2% annually [on average in the 100 areas], so a 0.39% increase in that context isn’t very small at all,” says Edward Kung, an assistant professor of economics
After hearing about this, I have realized it’s affecting my own life as well. The cities that I want to live in have competitive renting markets, while Airbnb homes abound. I’m struggling to find a home, but visitors are doing just fine.
But who cares about me? Let’s zoom out and show you how it’s affecting the city as well.
Airbnb hosts do not pay commercial property taxes or hotel taxes, so they are able to keep their prices much lower than hotels. Now hotels are being affected, and this can have a trickling effect, changing the lives of its employees and the way a city thrives.
From Uber to Airbnb, it seems like US citizens are taking their life back into their own hands. But what are the consequences of receiving a service from Betty next door? Are