New York City and the High Rent Conundrum

November 2, 2020
Share this Post: 

In August, a study came out that focused on the acute impact Airbnb has had on the NYC market when it comes to rent prices as determined by race, income, education, and location. 

Sophie Calder-Wang, an assistant professor at the Wharton School at the University of Pennsylvania, used a mix of demographic data from the Census Bureau’s American Community Survey with a report by AirDNA on Airbnb listings in 2018. In her report, Calder-Wang asks some hard-hitting questions:

“An important feature of many sharing economy platforms is that services are produced by peers, rather than firms, and therefore can distribute gains directly to individuals. Therefore, the question is empirical: For New York City residents, does the welfare gain from home-sharing offset the welfare loss from increased housing costs? Moreover, how does the welfare impact differ across key demographic characteristics, such as income, education, race, and family structure?”

Calder-Wang found that NYC renters see a net loss of $178 million a year from rent increases. These increases come from units that have been shifted from long-term rentals to short-term rentals on listing sites. These losses aren’t just for the more poverty-stricken residents, either. Even white, high-income renters are feeling the effects. 

In the report, she also sources that single-person households suffer bigger losses due to one-bedrooms being the more popular option on the short-term rental app. 

The conclusion? Calder-Wang calls for regulation. In her report, she wrote:

“The entry of Airbnb provides a channel for the existing space to be used by the highest value bidder, but the total quantity restriction raises rents for everyone. Therefore, a reasonable alternative regulatory approach is to allow housing supply to expand more easily.”

November 2, 2020
Victoria has been writing about property portals and marketplace sites for Online Marketplaces for over 3 years. She is also our resident artist and is responsible for all of the infographic content on the site.

Subscribe to our mailing list to get the famous, free Friday newsletter!

News and analysis to help build better online marketplace businesses, in your inbox, every Friday

Related News

Rightmove Opt 1
Rightmove Appoints Former Just Eat MD, Matthew Bushby as Its New CMO

British market leader Rightmove has announced the appointment of Matthew Bushby as its new Chief Marketing Officer. Bushby joins the...

Read More
Shutterstock 603344765
Casai Merges with Fellow LatAm Short Term Rentals Specialist Nomah After Job Losses

The Mexican short-term rentals marketplace operator Casai has merged with its Brazilian counterpart Nomah. Existing investors including a16z and Monashees...

Read More
Shutterstock 147091049
REA India Sidesteps Agents with Country's First User Subscription Service - 'Housing Premium'

The REA India-owned real estate portal has announced the launch of a new user subscription service that aims to...

Read More
North Media Posts Q2 Financial Results—BoligPortal on Track

North Media, the media group and operator of Danish Portal BoligPortal, released its Q2 2022 financial report, with results "as...

Read More

Editor's Pick