Introduction

New York City has been suffering through an affordable housing crisis for years. Between 2011 and 2017, New York City lost nearly 183,000 affordable units of housing renting for less than $1,000 – larger than the entire public housing stock. Affordable housing is increasingly hard to find, with vacancy rates for apartments renting for less than $1,000 at 1.54%.[1] Homelessness stands at a record high, with over 60,000 homeless people sleeping in shelters every night.  Meanwhile, wages are stagnant and rents continue to climb in all five boroughs.

The rising popularity of homesharing websites such as Airbnb is adding to the problem.[2]  The trendy replacement for hotels and hostels in effect removes housing units from the overall supply – units that might otherwise be available to rent to New Yorkers looking to rent an apartment.  The most basic concept in the field of economics – supply and demand – says that, everything else equal, a reduction in supply will lead to higher prices.  This report, by Comptroller Scott M. Stringer, evaluates the impact of homesharing on rents in New York City over the period 2009 to 2016.

Background

Between 2009 and 2016, rents rose 25% on average citywide, or $279 per month. Rents rose most rapidly in Brooklyn, by 35% ($340 per month) followed by Queens by 22% ($242 per month); Bronx by 21% ($171 per month); Manhattan by 19% ($276 per month); and Staten Island by 14% ($129 per month).[3]

During the same period, Airbnb listings skyrocketed, from 1,000 in 2010 to over 43,000 in 2015, before declining to slightly under 40,000 in 2016 according to data from AirDNA (Figure 1) – most in violation of existing State or City laws.[4]  Airbnb listings are most heavily concentrated in Manhattan (52% of all listings in 2016) and Brooklyn (35% of all listings in 2016), but are found in every borough. Airbnb listings are particularly concentrated in Manhattan below 59th Street, including Chelsea, Clinton and Midtown Business District (11.3% of all listings in 2016), Battery Park City, Greenwich Village and Soho (7.9%), Chinatown and Lower East Side (6.9%), Murray Hill, Gramercy and Stuyvesant Town (5.9%) as well as parts of Brooklyn including Greenpoint and Williamsburg (8.3%), Bedford-Stuyvesant (5.1%), and Bushwick (5.0%).

Rents in these eight neighborhoods rose at substantially higher rates than the borough average between 2009 and 2016. Average monthly rent in Greenpoint and Williamsburg went up by 62.6% ($659 per month), by 47.2% in Bedford-Stuyvesant ($407 per month), by 39.5% in Bushwick ($369 per month), by 25.9% Murray Hill, Gramercy and Stuyvesant Town ($488 per month), by 23.4% in Chelsea, Clinton and Midtown Business District ($398 per mont), by 23% in Chinatown and Lower East Side ($242 per month), and by 21.4% in Battery Park City, Greenwich Village and Soho ($411 per month).

Figure 1:  Airbnb Total Listings by Year, 2010 – 2017

Findings

We sought to estimate the impact that Airbnb listings have had on neighborhood rents.

Utilizing neighborhood level data for the years 2009 to 2016, we found that:

  • For each one percent of all residential units in a neighborhood listed on Airbnb, rental rates in that neighborhood went up by 1.58 percent.
  • Between 2009 and 2016, approximately 9.2 percent of the citywide increase in rental rates can be attributed to Airbnb.
  • Airbnb listings were heavily concentrated in parts of Manhattan and Brooklyn and had a greater impact on these neighborhoods. Approximately 20% of the increase in rental rates was due to Airbnb listings in midtown and lower Manhattan including neighborhoods such as Chelsea, Clinton, and Midtown Business District; Murray Hill, Gramercy, and Stuyvesant Town; Chinatown and Lower East Side; Battery Park City, Greenwich Village, and Soho as well as parts of Brooklyn including Greenpoint and Williamsburg.
  • In aggregate, New York City renters had to pay an additional $616 million in 2016 due to price pressures created by Airbnb, with half of the increase concentrated in the neighborhoods highlighted above.

Data and Methodology

We obtained Airbnb listings data from AirDNA (https://www.airdna.co/), which scrapes listings data on a daily basis from Airbnb. We gathered zip code level data going back to 2010 when Airbnb first listed dwellings in New York City, through the end of 2017. We then summed the data to the neighborhood level, defined by Census Bureau Public Use Microdata Area (PUMA).[5]  Whenever a zip code crossed PUMA boundaries, we used 2010 population ratios as weights to divide the number of listings between PUMAs. The number of unique listings in New York City peaked in 2015 at just over 43,000 and dropped to under 37,000 by 2017.

Rental rate data comes from the annual American Community Survey (2009-16). We use average monthly gross rent for all renters as our rent measure.[6]  We also control for neighborhood level economic and demographic characteristics using data from the American Community Survey.

We pooled eight years of data for 55 neighborhoods, bringing our total number of observations to 440. The dependent variable is the logarithm of average monthly gross rent by neighborhood in a given year.  The independent variable with the coefficient of interest is the share of residential units listed on Airbnb which is calculated by dividing annual unique Airbnb listings in the neighborhood by total residential units in the same neighborhood.[7]  We also control for demographic and economic changes in neighborhood level by including average household income (in log form), population (in log form), and the shares of college-educated and employed residents in the neighborhood. We also included year and neighborhood-level fixed effects (dummy) variables to control for otherwise uncontrolled-for trends and neighborhood characteristics.

A summary of the regression results is presented in Table 1.  We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level. Coefficients of other control variables including household income, population and share of college graduates are positive and statistically significant at 1-percent level. Employment rate is not statistically different from zero.

In order to calculate the Airbnb contribution to total change in rents, we first predict the change in PUMA level average gross rents from 2009 to 2016 using the regression model coefficients with existing conditions (i.e. with existing demographic and economic conditions as well as Airbnb listings).  We then compare these predictions with an alternative prediction in which Airbnb listings are set to zero throughout the entire time period. The difference between the latter and the former gives the rent change associated with Airbnb growth in the neighborhood. Results are reported in Table 2 (column labeled “Total Annual Rental Cost of Airbnb to the Neighborhood”), which shows rental change associated with increase in Airbnb listings at PUMA level. With existing conditions, from 2009 to 2016, citywide annual gross rents were predicted to go up by 25.3% (approximately $6.67 billion). If, however, there were no Airbnb listings, the rents would be predicted to go up by 23% (approximately $6.06 billion). Therefore, approximately $616 million, or 9.2 percent of the overall increase in rents for the period may be attributed to the rise in Airbnb listings.

Airbnb growth, however, was particularly high in certain neighborhoods. For instance, the share of Airbnb listings reached 4.1% of residential units in the Chelsea, Clinton & Midtown Business District neighborhood and 4.6% in Greenpoint and Williamsburg.  The largest relative Airbnb effects on the rental market occurred in Chelsea, Clinton & Midtown Business District (21.6%) and Murray Hill, Gramercy & Stuyvesant Town (21.5%). Average monthly rents went up by in these neighborhoods by $398 and $488 respectively out of which $86 and $105 per month could be attributed to Airbnb growth. The largest absolute effect occurred in Greenpoint and Williamsburg where average rents increased by $659 between 2009 and 2016, of which $123 can be attributed to Airbnb growth.

Table 1: Regression Results

Dependent Variable: Logarithm of Average Rental Rate

Variables Fixed Effects Model
AirBnb Share 1.584***

(0.389)

Household Income (log) 0.152***

(0.0349)

Population (log) 0.194***

(0.0421)

Share of College Graduates 0.436***

(0.109)

Employment Rate 0.154

(0.111)

Constant 2.760***

(0.554)

Observations 440
Number of PUMAs 55
R-squared 0.836
PUMA FE YES
Year FE YES
NOTE: Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

 

Table 2: Neighborhood Results

PUMA Code Neighborhood Name Rental
Units
(2016)
Airbnb Listings (2016) Monthly Rent
(2009)
Monthly Rent
(2016)
Change in Monthly Rent
(2009-16)
Change due to Airbnb (in $) % Change associated with Airbnb Total Annual Rental Cost of Airbnb to the Neighborhood
4001 Greenpoint & Williamsburg 45,147 3,296 $1,054 $1,713 $659 $123 18.6% $66,401,795
3808 Murray Hill, Gramercy & Stuyvesant Town 54,579 2,355 $1,887 $2,375 $488 $105 21.5% $68,820,035
3807 Chelsea, Clinton & Midtown Business District 59,679 4,486 $1,697 $2,095 $398 $86 21.6% $61,451,469
3810 Battery Park City, Greenwich Village & Soho 51,596 3,123 $1,916 $2,327 $411 $79 19.3% $49,121,185
4003 Bedford-Stuyvesant 34,555 2,047 $863 $1,270 $407 $59 14.4% $24,288,659
4002 Bushwick 36,052 1,990 $935 $1,304 $369 $58 15.6% $24,984,861
4004 Brooklyn Heights & Fort Greene 34,811 1,321 $1,270 $1,779 $510 $54 10.7% $22,737,172
3809 Chinatown & Lower East Side 60,180 2,746 $1,052 $1,294 $242 $47 19.6% $34,252,965
3805 Upper East Side 78,130 1,803 $1,780 $2,158 $378 $43 11.3% $40,027,985
3802 Hamilton Heights, Manhattanville & West Harlem 37,380 1,433 $1,093 $1,338 $245 $39 15.9% $17,452,649
4005 Park Slope, Carroll Gardens & Red Hook 30,750 787 $1,593 $1,906 $312 $39 12.4% $14,341,390
4006 Crown Heights North & Prospect Heights 38,532 1,238 $931 $1,307 $376 $39 10.4% $18,131,790
3806 Upper West Side & West Side 68,920 1,750 $1,722 $2,012 $290 $32 11.1% $26,613,050
4101 Astoria & Long Island City 58,653 1,239 $1,075 $1,386 $311 $29 9.2% $20,092,964
3803 Central Harlem 41,832 1,119 $798 $1,084 $287 $28 9.8% $14,118,122
4109 Sunnyside & Woodside 36,068 647 $1,292 $1,608 $317 $22 6.9% $9,431,814
3801 Washington Heights, Inwood & Marble Hill 60,473 995 $935 $1,214 $279 $21 7.5% $15,253,929
4011 Crown Heights South, Prospect Lefferts & Wingate 32,957 585 $938 $1,213 $275 $20 7.4% $8,067,130
4012 Sunset Park & Windsor Terrace 33,528 394 $991 $1,312 $321 $20 6.2% $7,991,986
4014 Borough Park, Kensington & Ocean Parkway 31,126 263 $988 $1,405 $417 $19 4.6% $7,113,264
4110 Ridgewood, Glendale & Middle Village 35,651 464 $1,049 $1,375 $326 $14 4.3% $5,989,498
3804 East Harlem 37,814 1,003 $831 $960 $129 $13 10.4% $6,114,647
4015 Flatbush & Midwood 41,110 396 $935 $1,196 $261 $13 5.1% $6,618,526
4108 Forest Hills & Rego Park 27,313 216 $1,241 $1,600 $359 $12 3.5% $4,088,401
4007 Brownsville & Ocean Hill 33,250 404 $705 $886 $181 $10 5.3% $3,817,643
4010 East Flatbush, Farragut & Rugby 29,698 256 $929 $1,192 $264 $10 3.7% $3,488,963
4013 Bay Ridge & Dyker Heights 27,982 195 $1,070 $1,354 $284 $9 3.2% $3,041,981
4103 Flushing, Murray Hill & Whitestone 48,979 292 $1,177 $1,368 $191 $7 3.7% $4,104,914
4107 Elmhurst & South Corona 33,304 190 $1,115 $1,320 $205 $7 3.5% $2,895,541
4008 East New York & Starrett City 37,776 268 $839 $1,021 $182 $6 3.4% $2,794,966
4016 Sheepshead Bay, Gerritsen Beach & Homecrest 27,490 167 $918 $1,222 $303 $6 1.9% $1,880,709
4102 Jackson Heights & North Corona 32,819 228 $1,131 $1,288 $157 $6 3.9% $2,389,733
4106 Briarwood, Fresh Meadows & Hillcrest 28,452 100 $1,064 $1,448 $384 $5 1.2% $1,597,232
4114 Far Rockaway, Breezy Point & Broad Channel 22,373 177 $856 $995 $139 $5 3.5% $1,302,810
3701 Riverdale, Fieldston & Kingsbridge 27,564 95 $1,011 $1,225 $214 $4 1.7% $1,211,959
4009 Canarsie & Flatlands 27,002 146 $1,000 $1,242 $242 $4 1.6% $1,236,019
4104 Bayside, Douglaston & Little Neck 12,621 83 $1,269 $1,542 $273 $4 1.6% $667,138
4111 Richmond Hill & Woodhaven 23,544 126 $1,132 $1,354 $222 $4 1.9% $1,169,156
3704 Pelham Parkway, Morris Park & Laconia 29,595 72 $887 $1,126 $239 $3 1.3% $1,087,022
3903 Port Richmond, Stapleton & Mariners Harbor 26,520 125 $855 $1,061 $207 $3 1.5% $1,013,387
4018 Brighton Beach & Coney Island 32,416 119 $770 $946 $177 $3 1.5% $1,040,590
3706 Bedford Park, Fordham North & Norwood 39,929 66 $854 $1,032 $178 $2 1.1% $942,338
3707 Morris Heights, Fordham South & Mount Hope 41,468 54 $777 $970 $193 $2 1.1% $1,029,003
3708 Concourse, Highbridge & Mount Eden 40,145 86 $750 $934 $184 $2 1.2% $1,095,031
3709 Castle Hill, Clason Point & Parkchester 50,936 64 $819 $1,025 $206 $2 0.8% $1,006,744
3710 Hunts Point, Longwood & Melrose 42,778 114 $653 $811 $158 $2 1.1% $876,036
4017 Bensonhurst & Bath Beach 34,275 87 $899 $1,214 $314 $2 0.7% $941,936
4105 Queens Village, Cambria Heights & Rosedale 16,594 108 $1,178 $1,325 $147 $2 1.4% $410,678
4112 Jamaica, Hollis & St. Albans 32,053 142 $990 $1,146 $156 $2 1.3% $801,327
3702 Wakefield, Williamsbridge & Woodlawn 27,747 62 $966 $1,092 $126 $1 1.0% $402,301
3703 Co-op City, Pelham Bay & Schuylerville 22,244 37 $970 $1,095 $125 $1 0.8% $251,180
3705 Belmont, Crotona Park East & East Tremont 47,005 70 $712 $838 $126 $1 0.7% $506,036
4113 Howard Beach & Ozone Park 11,866 58 $1,139 $1,254 $114 $1 1.0% $167,533
3901 Tottenville, Great Kills & Annadale 8,205 20 $1,094 $1,074 ($19) $0 0.3% ($4,864)
3902 New Springville & South Beach 12,239 53 $1,048 $1,109 $61 $0 0.8% $72,989

 

Acknowledgements

The Comptroller wishes to thanks Selçuk Eren, senior economist in the Bureau of Budget, for his work on this report, as well as Lawrence Mielnicki, Chief Economist, and Preston Niblack, Deputy Comptroller for Budget.

Appendix

Table A:1:  Residential Units and Airbnb Listings by Neighborhood, 2016

PUMA Code Neighborhood Name Airbnb listings (2016) Residential Units (2016) Airbnb Share (2016)
3701 Riverdale, Fieldston & Kingsbridge 95 50,560 0.2%
3702 Wakefield, Williamsbridge & Woodlawn 62 53,892 0.1%
3703 Co-op City, Pelham Bay & Schuylerville 37 49,029 0.1%
3704 Pelham Parkway, Morris Park & Laconia 72 50,610 0.1%
3705 Belmont, Crotona Park East & East Tremont 70 70,636 0.1%
3706 Bedford Park, Fordham North & Norwood 66 50,419 0.1%
3707 Morris Heights, Fordham South & Mount Hope 54 52,433 0.1%
3708 Concourse, Highbridge & Mount Eden 86 55,131 0.2%
3709 Castle Hill, Clason Point & Parkchester 64 68,096 0.1%
3710 Hunts Point, Longwood & Melrose 114 67,852 0.2%
3801 Washington Heights, Inwood & Marble Hill 995 84,947 1.2%
3802 Hamilton Heights, Manhattanville & West Harlem 1,433 61,784 2.3%
3803 Central Harlem 1,119 67,946 1.6%
3804 East Harlem 1,003 61,588 1.6%
3805 Upper East Side 1,803 137,519 1.3%
3806 Upper West Side & West Side 1,750 125,673 1.4%
3807 Chelsea, Clinton & Midtown Business District 4,486 108,218 4.1%
3808 Murray Hill, Gramercy & Stuyvesant Town 2,355 101,111 2.3%
3809 Chinatown & Lower East Side 2,746 91,149 3.0%
3810 Battery Park City, Greenwich Village & Soho 3,123 95,239 3.3%
3901 Tottenville, Great Kills & Annadale 20 62,339 0.0%
3902 New Springville & South Beach 53 54,777 0.1%
3903 Port Richmond, Stapleton & Mariners Harbor 125 68,653 0.2%
4001 Greenpoint & Williamsburg 3,296 71,055 4.6%
4002 Bushwick 1,990 54,560 3.6%
4003 Bedford-Stuyvesant 2,047 59,405 3.4%
4004 Brooklyn Heights & Fort Greene 1,321 76,011 1.7%
4005 Park Slope, Carroll Gardens & Red Hook 787 52,216 1.5%
4006 Crown Heights North & Prospect Heights 1,238 62,837 2.0%
4007 Brownsville & Ocean Hill 404 56,542 0.7%
4008 East New York & Starrett City 268 63,601 0.4%
4009 Canarsie & Flatlands 146 71,956 0.2%
4010 East Flatbush, Farragut & Rugby 256 56,163 0.5%
4011 Crown Heights South, Prospect Lefferts & Wingate 585 48,350 1.2%
4012 Sunset Park & Windsor Terrace 394 51,043 0.8%
4013 Bay Ridge & Dyker Heights 195 52,955 0.4%
4014 Borough Park, Kensington & Ocean Parkway 263 47,063 0.6%
4015 Flatbush & Midwood 396 62,138 0.6%
4016 Sheepshead Bay, Gerritsen Beach & Homecrest 167 63,169 0.3%
4017 Bensonhurst & Bath Beach 87 69,620 0.1%
4018 Brighton Beach & Coney Island 119 52,290 0.2%
4101 Astoria & Long Island City 1,239 84,838 1.5%
4102 Jackson Heights & North Corona 228 61,099 0.4%
4103 Flushing, Murray Hill & Whitestone 292 97,693 0.3%
4104 Bayside, Douglaston & Little Neck 83 46,865 0.2%
4105 Queens Village, Cambria Heights & Rosedale 108 67,354 0.2%
4106 Briarwood, Fresh Meadows & Hillcrest 100 65,384 0.2%
4107 Elmhurst & South Corona 190 48,613 0.4%
4108 Forest Hills & Rego Park 216 57,309 0.4%
4109 Sunnyside & Woodside 647 61,224 1.1%
4110 Ridgewood, Glendale & Middle Village 464 68,089 0.7%
4111 Richmond Hill & Woodhaven 126 49,917 0.3%
4112 Jamaica, Hollis & St. Albans 142 79,376 0.2%
4113 Howard Beach & Ozone Park 58 41,837 0.1%
4114 Far Rockaway, Breezy Point & Broad Channel 177 51,028 0.3%

 

[1] Source:  Department of Housing Preservation and Development: Selected Initial Findings of the 2017 New York City Housing and Vacancy Survey (dated February 9, 2018) (http://www1.nyc.gov/assets/hpd/downloads/pdf/about/2017-hvs-initial-findings.pdf).

[2] There are other homesharing websites, including HomeAway and VRBO, which have smaller presences in the City and for which listings data was not available.  They were therefore not included in this analysis.  Presumably their inclusion would have amplified the results.

[3] Source: U.S. Census Bureau, American Community Survey, 2009-2016.

[4] A report by Attorney General Eric Schneiderman found that 72% of short-term rentals on Airbnb appeared to be illegal (https://ag.ny.gov/pdfs/AIRBNB%20REPORT.pdf)

[5] PUMAs are geographic units used by the US Census for providing statistical and demographic information. Each PUMA contains at least 100,000 people. There are 55 PUMAs in New York City. See https://www.census.gov/geo/reference/puma.html for more details.

[6] Gross monthly rent includes contract rent, utility costs, and fuel costs. Gross monthly rent amounts are more comparable across time and households than contract rent which may or may not include utilities and fuels.

[7] A table with Airbnb listings, Residential Units and Airbnb Share by PUMA in 2016 can be found in the Appendix.