Airbnb and Gentrification!

There has been a lot of talk about the idea that Airbnb is also contributing to Gentrification.

This article is meant to shed some light into this. It is broken into several sections.  What is Airbnd, How gentrification occurs, Impact of Airbnb in NYC, Trends of Airbnb in Poor Communities, Airbnb popularity and importance and the negative side of Airbnb.


What is Airbnb:

Airbnb is an online rental company that advertises living spaces for travelers all over the world. A person wishing to travel to a particular country or city can log on and search possible places to stay. Once they have decided they pay Airbnb directly, who charges a service fee for this service and collects all the monies and gives the payments directly to the hosts. 


The host on the other hand contacts Airbnb, gains assistance in listing their apartments or rental space, and they even provided a professional photographer to shoot the location.  All financial transactions take place with Airbnb and the host is charged a very small fee for this service.  Airbnb also provides tax statements to the hosts at the end of the year.  For more detailed please contact Airbnb directly.


How Gentrification occurs.

Gentrification can be done in two ways; one, a natural condition that occurs as demographics, economics and social conditions change and two, it can be done intentionally by political policies such as rezoning and tax breaks.


Rezonings in poor and moderate communities that encourage up zonings,(increase in building heights) are a major contributor to gentrification for it signals to everyone that change is happening, money is coming, property values are rising and this will now be a more affluent community. Thus landlords and property owners begin to engage in all types of illegal and legal tactics to make room for a wealthier population. It also encourages this wealthier group to head into the community with the idea of getting in on the ground floor of apartments and homes before the price values hit the ceiling.


Thus our stance in this community (Flatbush/Crown Heights) is to prevent up zoning of our community because of the negative impact it will have. As residents are literally pushed out of our communities, both legally and illegally, with no place to go, as has been attested to the serious increase in the homeless population all over NYC.


Why into the street. The vacancy rate for poor and moderate households is almost at 1%. This is an all time low, but the overall vacancy rate is almost 4%, because the vacancy rate for market rate housing is almost 8%. The overall vacancy rate is the combination of the two. Thus when residents of poor or moderate income households are put out of their apartments, there is literally no place to go but into the streets or the shelters.


There are currently estimated to be from 120,000 to 150,000 people who are homeless in NYC today! Just recently squads of police have been employed to remove these people from the streets and we expect to see “details” assigned to look for the homeless and drive them off the streets into the shelters. Currently the shelters have 60,000 men, woman and children with over 30,000 being children!

Impact of AirBnb in NYC

Airbnb popularity actually started in mid-town Manhattan, about ten years ago, in an already white middle-upper class, a non-gentrified community. What Airbnb did was take away billions of dollars from the hotel industry and begin to distribute this wealth to the common resident.


Thus the hotel industry a powerful group began to lobby their local officials to demand a stop to this enterprise and one of the things they began to think about was to pass legislation that would not allow a rent-stabilized tenant to use this service, because most of the Airbnb rentals were coming from apartment dwellers in Manhattan!

The Trend of Using Airbnb in Poorer Communities

There is no trend to use Airbnb in poorer communities until that community has already been gentrified! And thus there is no evidence that Airbnb creates gentrification! All one has to do is ask Airbnb to show  their demographics when they began and their rental trends.  What you will see is that Airbnb follows gentrification!  For example, you will not see a lot of Airbnb in the South Bronx on Jerome Ave, that is slated to be rezoned, but you will see it in Williamsburg that has already been rezoned and gentrified!

Airbnb Popularity and Importance to NYC economy.

One major reason Airbnb has gotten so popular is the basic concept of economics: as rents have gotten higher and people wages have remained the same, a lot of people started looking at other options to supplement their incomes and to pay their rents, which are on the average is almost 50% of their income.  Airbnb provided an opportunity for people to be able to address these increase rents with hosting someone in their home.


The reason the housing market has been able to maintain the increase rentals prices, without increasing salaries is that Airbnb is now providing some of that support. Thus the hotel industry is no longer getting all of this money, but it is being spread around other communities other than Mid-town Manhattan.


As Tourists now come into other communities instead of the central location of Manhattan, they are spending more of their dollars there, thus helping to increase the revenue in these areas.  This includes giving money to more mom and pop shops, eateries etc...


The tourist themselves are saving because these communities have neighborhood prices and not tourist prices, so they  are able to spend more and get more for their buck then if they were confined to Mid-town Manhattan.


In fact Airbnb has its own statistics where it shows when tourist come into other communities, they actual stay longer and spend more! For more information about this I suggest that you reach out to them concerning both their rental trends and other statistical data they have accumulated on NYC.


Airbnb is around the world, happening everywhere! In countries that are not facing gentrification and so it really is not an enterprise that creates gentrification is it just a enterprise that is distributing more wealth out of the hands of a few big hotel industries into the common person's hands and into their communities.

Negative Side of Airbnb

Currently there is emphasis being put on the illegal behavior of landlords and developers who are using airbnb as hotels. These people comprise of less than 10% of the airbnb market but they are being displayed as the majority of airbnb rentals in NYC. This is being done to discredit Airbnb because of its tremendous negative impact it has had on the hotel industry in NYC.


If this really was the issue, why hasn't the City Council come up with regulations that target these people who are breaking the law instead of tenants who are not? The answer is simple, these illegal behaviors actually are working in favor of developers and landlords, especially in communities that have just been gentrified. By turning a lot of the units into hotel like accommodations, the landlords still declare these apartments vacant, thus adding to the vacancy rate and at the same time allows them to continue to keep those high rent prices for the true tenants.


It is basic economics, called supply and demand, if there is an oversupply of apartments and the landlords need to pay their bills and make a profit they will reduce the prices for their apartments. However, if these "empty" apartments are actually generating income, above and beyond market rates, this allows them to keep the rents high in their buildings. It also allows them to continue to gain tax breaks for these units, because they are "empty".


It also works for the real estate industry, by contributing to the overall vacancy rate that is at almost 8% for market rate housing. Why do they want it high, because the rent stabilization laws are based upon the idea of the city being in an emergency situation, that is determined by having a vacancy rate of under 5%. Once that number its above 5% rent stabilization and rent control will no longer apply for NYC!


Currently rental apartments for the poor and moderate income families are heading down to 1% and the market rate up to 8%, thus we are almost at a 4% vacancy rate! If this trend continues, eventually within the next two years we will have hit that 5% and then have another set of issues to deal with!


On the other hand, It is a shame that prices of apartments have went up so high that in order for people to live they have to invite complete strangers into their homes, just to make ends meet.  Sometimes these people can steal, break things or just cause trouble.


However, despite these inconveniences, Airbnb is very popular and is probably going to be increasing its presence in more communities as rents continue to soar!  Currently they are concentrated mainly in Manhattan, which is still the epic center of NYC, but Brooklyn is now second on it list!


What is clear is that the rental market in NYC is challenging and the average New Yorker is now rooming with someone in some kind of capacity, just to make ends meet.  This fact alone is why Airbnb is fast becoming an essential ingredient into the economic makeup of New York City.  It is like having a roommate, who is constantly shifting and changing, but providing the extra cash to pay the rent!