Airbnb’s NYC woes

airbnbYou’ve been following the airbnb legal battles in NYC, right?

As a local host I’ve been following these issues closely. I organize a local Airbnb group for West Village hosts, and in that group this has become a very sensitive topic. Airbnb organizers and various corporate representatives have met with us NYC hosts to discuss these issues.

Despite plenty of rhetoric, there is an ever widening grey area in this debate.

It seems pretty clear that the majority of NYC Airbnb hosts are doing business in good conscience, earning extra money to get by in a very costly city (where rent has been increasing much faster than income), and now they’re being caught in the legal crossfire.

To be fair; neither Airbnb, nor the city or state of New York have delineated a clear line between illegal hotels and locals with a room to rent. Unfortunately, this line is increasingly blurring as more and more money enters the picture.

Today I saw this: I Bought an Apartment Just to Rent Out on Airbnb. Maybe that’s a great idea, although if you’re in New York don’t get too excited, the market is already a bit crowded.

Here’s what’s actually going on: People in NYC are cashing in on this, and an increasing number are doing so illegally. The top Airbnb hosts in NY account for the bulk of all Airbnb NYC revenue. As the NYTimes piece points out the top hosts “have each grossed at least $400,000 over the past three years”. More and more we’re seeing individuals renting several units and turning them into Airbnb rentals. These aren’t exactly people struggling to get by.

So while the legal issue remains clear as mud, what do we know?

Share Economy?

At every Airbnb sponsored meeting someone will bring this up. In a nutshell, this is the future, it’s a revolutionary share economy, man.

It’s very tempting to take a hippie, neo-socialist, pay-it-forward kind of attitude when discussing Airbnb and it’s “share economy”.

But from someone with an active CouchSurfing and Airbnb profile, let’s be very clear — this isn’t CouchSurfing, Airbnb is straight up free market capitalism. This isn’t sharing resources in a gift-economy and feeling worldly about our shared humanity, this is unregulated hyper-capitalism. We are unapologetically monetizing resources and charging prices based on a very favorable demand-curve. This is as definitively “selling out” as you can possible get, and it’s par for the course in todays “entrepreneurial” overdrive.

But this isn’t true for most of the New York hosts, right? We’re just getting by, we’re making some money on Airbnb and it helps us live in New York. We are, at most, part-time hobby capitalists in this game.

What will happen when this unregulated market grows beyond the lucrative demand-curve and the supply evens out? If you’re profiting today on Airbnb, what will you do when the professional capitalists take over? In the game of “selling out” there will be lots of people willing to do much more selling out than a hobbyist. And historically, free markets never stay free when completely unregulated (they tend to be cornered by whomever was best at selling out).

Bad Actors?

This is the term Airbnb and the city and state of New York refer to as being responsible for these problems. These are the illegal hotels and profiteers who essentially compete with hotels without having to pay hotel taxes, and inadvertently drive up the cost of rent for everyone else (taking apartments off the rental market and putting them in a hotel market).

What is a Bad Actor exactly? Airbnb won’t say. The city won’t say. The state won’t say. Airbnb is doing very little to root out obvious bad actors, possibly because bad actors are very profitable and without a legal definition there’s no incentive to stop them.

Ask the person renting out a spare room as an alternative to roommates; a bad actor is everyone renting out their entire apartment.

Ask the person who rents their entire apartment; a bad actor is someone who has multiple apartments, not like them, who only rent out their apartment occasionally while they shack up somewhere else. It’s a part-time thing.

Ask the person who rents multiple apartments; a bad actor is the building owner who no longer rents out their apartments to locals but instead rents the available units to tourists on Airbnb.

Ask the building owner, a bad actor is the tenant renting out their apartments on Airbnb in clear violation of city ordinance and zoning laws (attracting unwanted attention in a city where building ordinances are routinely ignored).

In truth, all of the above are happening — and as expected in a hyper-capitalist market, it’s growing fast and people are “moving up” so-to-speak to higher and higher levels of this vaguely defined, “Bad Actor”. The person who starts out occasionally renting their place very quickly will realize that they can pay their entire months rent after a week or so of Airbnb rental. It’s hard not to rent another place when things are so lucrative.

Safety?

You’ll hear often that Airbnb rentals do not meet the basic safety requirements of a hotel. Which is kind of weird, because that’s essentially saying that New Yorkers live in unsafe buildings.

How exactly does this work? If you’re a tourist, staying in NYC means you’ll be guaranteed a sprinkler system, a functioning fire-safety plan, and safety conscious building inspections. But if you’re a New Yorker, go fuck yourself.

If residential buildings are not considered safe enough for tourists to rent, the solution should not be to ban tourists from staying in these buildings while willfully ignoring the safety of tax-paying residents — the solution is to make all buildings safe.

There may be a safety problem in New York buildings, but let’s not pretend that’s the same issue as Airbnb rentals.

$$$

In the end, this is of course about money. Who in New York City will profit? And will anyone get screwed over?

Ideally, a reasonable definition of Bad Actor will be defined and enforced to protect those most vulnerable who really do need something like Airbnb to make ends meet. There are plenty of wonderful stories out there, and at some point it does start to remind me of CouchSurfing (but with money, so, not really).

The risks though are quite apparent. Airbnb is a for-profit corporation who is enjoying incredible revenue growth, they have little to no incentive to help out vulnerable New Yorkers. Additionally, there are powerful special interest groups, and of course lots of potential taxes for the city and state to levy. Then there are the opportunistic and greedy entrepreneurs that will not think twice about taking an apartment off the rental market for consumption by tourists.

And ultimately there are many tourists who would love to come to New York and stay in an affordable apartment and live like a New Yorker.

Nowhere in this mess of conflicting interests is a concern for those New Yorkers who are struggling to make ends meet. Personally, I’m hoping a reasonable legal definition will emerge before this whole thing is killed by it’s own hyper-capitalist growth. Because obviously this is a city full of reasonable people who will put the greater good in front of their own short term investment interests… well, maybe things will accidentally fall together amidst the irrational chaos and greed, there’s hope!