As it continuously rises in popularity, especially in the recent years, the website and app Airbnb, which helps customers find local properties to stay in during their vacations instead of booking hotels, has supposedly negatively affected the rental market in many tourist destinations and urban neighborhoods around the world. Analysts call it the “Airbnb effect”. But how exactly does Airbnb’s short-term rental availability hurt the rental market? Here are five ways that your neighborhood is affected by this trend:
- Airbnb drives up rent and house prices.
Technological advances like Airbnb have redefined the time frame on which individuals rent spaces. Because of these innovations, people can rent spaces at a much shorter period, which threatens the long-term rental market because more and more property owners choose to list their spaces in Airbnb. Instead of finding long-term tenants, they find short-term tenants who are willing to pay more per night. As a result, there is a lower supply of long-term rental properties which, based on basic economics, drives up rent in areas with a lot of Airbnb listings.
- Airbnb lowers the vacancy rates.
Airbnb also creates a problem for people looking to rent a space long-term. Because property owners now prefer to put their houses and apartments in the short-term rental market, fewer properties are available for long-term occupancy, making it harder for individuals to find a more permanent place to stay at.
- Airbnb can drive up mortgages.
Property owners who also reside in their properties now use Airbnb to rent out their guest rooms for short-term guests. Some also rent out their whole house while they’re away on vacation themselves. The extra income they earn from Airbnb allows them to get larger mortgages from banks, which can drive up the average mortgage in a whole neighborhood or urban area.
- Airbnb hosts don’t all follow city regulations on rental properties.
- Airbnb leads to gentrification.
While most listings are condensed to areas that are already gentrified, Airbnb makes it more possible for neighboring areas to follow suit. As Airbnb listings spread to other neighborhoods, gentrification becomes more probable in these areas too.
Airbnb is one of the most innovative technological advances in the recent years. But, like any invention that man has created, it also creates undeniable problems.