New York City is undeniably one of the most coveted places to live around the globe – the Big Apple, the Empire State of Mind, the “you make it here, you can make it everywhere” perception. However, for those actually living in the city, the housing situation is actually not so great. With homelessness at one of the highest points in recent history, the increasing deregulation of rent stabilized apartments, and an increase in overcrowding in neighborhoods, low-income New Yorkers face a housing crisis imminent in their everyday lives. Airbnb is another factor playing into this housing affordability crisis, and the battle between Airbnb and New York residents presents itself as a tourist versus resident conflict that requires policy attention and monitoring due to the rise of the house sharing economy.
With terms such as “gentrification” thrown around to signify displaced, often immigrant and ethnic communities and rising rent prices in neighborhoods, New Yorkers are forced to ask a question: who gets to live in the city? In an effort to preserve neighborhoods and rent levels, New York City Mayor Bill de Blasio pushed for Mandatory Inclusionary Housing (MIH), which City Council adopted in 2016. MIH requires developers building new housing in designated areas in New York City set aside a percentage of housing as affordable units in an effort to create more affordable housing for New Yorkers. Land use laws such as MIH regulate the inevitability of luxury apartments considered inaccessible to the average New Yorker. Plans that interrupt the traditional flow of development raises yet another question: are plans that regulate markets necessary or even fair?
The United States is an undeniably capitalistic and neoliberal society that flows in the direction to which the invisible hand directs. Market forces and consumer preferences may place certain neighborhoods in high demand, which changes the demographics of an area. Changing people-scapes is not new for New York City; neighborhoods frequently change with new waves of immigrants and government initiatives. However, the Airbnb phenomenon is a different type of neighborhood-changer, and it is within the reach of regulation and thorough analysis.
Although the tourism industry is undoubtedly a large part of the city’s economy, policymakers need to keep in mind the roots and foundations that make the tourist industry possible in the first place: the service sector, which is made up of many low to middle-income workers, who can’t afford to pay market rate rent. New York City’s vacancy rate is at a low of 3.45 percent, and many reports signal that Airbnb may be contributing to this shortage of housing supply. According to a 2016 report by the BHJ Advisors LLC prepared for two organizations, the Housing Conservation Coordinators and Mobilization for Justice (formerly known as MFY Legal Services,) the vacancy rate for rental units citywide could increase by 10 percent if 8,058 units defined as Impact Listings – listings that are mostly likely to result in the supply of residential rental units – are returned back into the traditional housing market. A separate McGill University report states that New Yorkers pay $380 more per year towards rent because of the decrease in available units as a result of Airbnb.
Unregistered and unmonitored Airbnb listings also pose economic losses through the loss of foregone uncollected tax revenue. The New York State Attorney General’s report on Airbnb’s impacts highlights this missed opportunity. Between 2010 and 2014, 72 percent of listings in New York City were in violation of state and city short-term multiple dwellings laws that prevent the renting of three or four family units under thirty days. If those units were taxed the 5.875 percent hotel room occupancy, the city would have generated $33.5 million in potential hotel taxes.
With New York City Mayor Bill de Blasio’s stated commitment to preserve and build affordable housing, attention to Airbnb is a must. Keeping in mind the long-term residents and the value of diversity, the city has a duty to enforce existing laws and also to plan ahead in accordance to rapid rise of the sharing economy. This includes fostering more affordable housing preservation and development through official land use policies such as Mandatory Inclusionary Housing and other subsidy and grant programs.
However, the issue moves beyond regulating developers and into monitoring Airbnb practices on the company and host level. New York City’s business regulation model as it stands currently does not require Airbnb to share information with the government. This prevents completely accurate record-keeping and economic analysis needed to investigate Airbnb’s full impact on housing affordability. The lack of data sharing in itself warrants legal complications over business privacy rights. Nevertheless, Lawmakers on the city level must act in accordance and alongside the changing economic landscape to keep New Yorkers in New York City.