On any given night, 2 million people are staying in an Airbnb rental. Most of you reading this article has probably stayed in one, as they have 150 million users. There’s no arguing that Airbnb has made waves in the tourism and short-term housing industry. However, there is a question as to how good it is for the cities themselves.

As tourists we probably all love Airbnb. If a city averages hotel costs of over $200 a night, you might be able to get an Airbnb room for less than half that. It really has leveled the economic playing field for travelers.

It has also become an important, if not crucial source of income for homeowners. Many of whom have come to depend on Airbnb to help pay their mortgage. Others have purchased second homes or have apartment buildings with the sole purpose of Airbnbing – and so in lies the problem.

Cities across the world are beginning to crack down on these short-term stays. New York, Bosting, Santa Monica and DC are just a few that have recently been in the news for their anti-Airbnb laws. Why are they doing this?

The first instinct for many is to think that the powerful hotel lobby is controlling city governments. To be sure that is definitely part of it. A recent study showed that for every 1% increase in Airbnb listings hotel revenue dropped by .025% That may seem tiny, but many cities are growing at 100% per year in listings. That’s a scary forecast for hotels.

Perhaps you have no sympathy for hotel chains and their profitability. That’s fair. The second argument again Airbnb is that it limits the housing supply for that city. Homeowners might simply turn their properties into Airbnb listings if they believe they could make more money, which may exacerbate already existing housing problems in cities. The more Airbnb rentals the less long-term rentals are available, which could raise prices and further hurt residents that are already strapped from rising rent.

No city is trying to eliminate Airbnb all together (at least I don’t think so). Instead they are creating laws that attempt to keep as many long-term rentals on the market as possible. In most places if you are going on a long vacation you can still Airbnb your house while you’re gone. Most of these new laws will still allow you to Airbnb a room in your house as well (though that may not be the case in D.C.) Many people who rent out part of their home have come to rely on Airbnb has part of their income.

As tourists we all love Airbnb. Home owners and real estate investors love it as well. Renters and city governments, however, have legitimate concerns. Until housing construction can meet demand and renting prices stabilize, keeping apartments available for long term leasing must remain a priority.

 

For more information on real estate investing visit Ali Safavi Real Estate.