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'Airbnb Effect' Impacting New York's Rental Market

Posted by Hannah Raissa Marfil on Oct 16, 2015 06:00 AM EDT
Airbnb'S Value Estimated At $10 Billion After New Round Of Investments more big
SAN ANSELMO, CA - APRIL 21: The Airbnb app is displayed on a smartphone on April 21, 2014 in San Anselmo, California. Online home-rental marketplace Airbnb Inc. is about to receive more than $450 million in investments from a group led by private-equity firm TPG. The new investments will value the startup at $10 billion, significantly higher than some publicly traded hotel chains. (Photo : Justin Sullivan/Getty Images)

There's no question that short-term rental services that online companies offer, such as Airbnb, has become popular in the U.S. and other parts of the world.  Critics and analysts have raised concerns that Airbnb rentals are affecting the housing market.  A recent study conducted by The Real Deal explores just how much it has affected New York's rental market. 

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The Real Deal named the San Francisco-based company's impact on the rental market as the "Airbnb effect."   To complete the analysis, The Real Deal gathered data from several sources such as available data on Airbnb's website on rental listings in New York, information from independent data analysis website Inside Airbnb, the Housing and Vacancy Survey and Street Easy rental details. 

Based on The Real Deal's analysis, they discovered that the "Airbnb effect" has pushed apartment rentals up to as high as $69 a month in neighborhoods such as Williamsburg and Greenpoint.  It also affected rental prices in Midtown, Chelsea and Hell's Kitchen, where rental prices would see increases between $39 to $67 a month.  The same upward trend would be felt in East Village, Lower East Side and Chinatown, with rental hikes of $30 to $57 a month. 

However, Airbnb questioned the methodology and results of the report, states The Real Deal.  In a statement, Airbnb spokesperson Christopher Nulty said the report ""uses bad data to make inaccurate, misleading conclusions." He added that the analysis provides a wrong assumption that the people renting out their spare bedrooms when they're in town and those renting out their whole apartment are the same.  Nulty explained, "The report mixes apples and oranges... The truth is that Airbnb allows thousands of New Yorkers to stay in their homes and to afford to live in an increasingly expensive city, and 90% of NYC Airbnb hosts share the home in which they live."

Meanwhile, Airbnb's growing popularity in New York has also caught the attention of legislators who are considering to ramp up enforcement and ensure that tenant laws are being followed, reports Commercial Observer.  State Assemblywoman Linda Rosenthal said that she'd seen a rise in residential properties being removed from the market, following a "sting" operation that she conducted on Airbnb rentals earlier this year.  She added that the city government should be more "aggressive on violations" and hinted at implementing stricter rules.  Rosenthal said, "Perhaps we need stronger legislation... that's not off the table."

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