New York City

Airbnb Scandal! New York Attorney General Concerned Citizens May Be Satisfying Needs with Their Apartments

|

New York's Attorney General's office has just issued a report on "Airbnb in the City," studying the impact of the service that allows humans to easily find other humans who might want to pay to stay in their domiciles for short periods.

Since this sort of lodging service has largely heretofore been dominated by businesses calling themselves "hotels," regulated and taxed in specific ways by localities and states, entrenched interests in both business and government feel bedeviled by this innovation of the tech-enabled "sharing economy" that makes finding paying use for idle resources easier and cheaper for everyone.

Some of the AG's findings, examining Airbnb from 2010-June 2014, include a tenfold increase in Airbnb bookings, $282 million in revenue (including both the service and the hosts), and, hmm, 72 percent of Airbnb units violating some local law or another (again, while, overwhelmingly, making both renters and temporary tenants happy).

Also, the AG report finds a small number of people controllling lots of units dominate the NYC market:

Ninety-four percent of Airbnb hosts offered at most two unique units during the Review Period. But the remaining six percent of hosts dominated the platform during that period, offering up to hundreds of unique units, accepting 36 percent of private short-term bookings, and receiving $168 million, 37 percent of all host revenue. ….Each of the top 12 New York City operations on Airbnb during that period earnedrevenue exceeding $1 million

This, naturally, makes fewer units available for long-term lodging. This seems like an obvious bad thing, to people who have decided more long-term lodging is better for them, or the city, or just their sense of how things should go.

Why that value judgement should mean anything when lively demand for that many short term rentals clearly exists is unclear, but the AG's office seems to think that to merely state this fact is tantamount to some sort of call to action.

The reports details some of the specific regulations likely being broken by Airbnb operators, and notes, again as if this should matter to you, that:

Bookings in just three Community Districts in Manhattan—the Lower East Side/Chinatown, Chelsea/Hell's Kitchen, and Greenwich Village/SoHo—accounted for approximately $187 million in revenue to hosts, or more than 40 percent of private stay revenue to hosts during the Review Period. By contrast, all the reservations in three boroughs (Queens, Staten Island, and the Bronx) brought hosts revenue of $12 million—less than three percent of the New York City total.)

I mean, the AG's office doesn't need to rub it in to Queens, Staten Island, and the Bronx that way fewer people want overnight visits there, but his office is cruel and judgmental.

The AG's office notes it finds the growth in the use of Airbnb "staggering." Some might just call it useful, nice, good for them, or who cares? (Or, sure, I'm pissed seeing a new couple stagger in to the apartment next door every night.) But the AG is staggered.

Mostly, I suspect, staggered by the $33 million in taxes his office believes the city of New York should be owed on all this making-people-happy, the vast majority of which it isn't getting because it's a pretty easy tax to evade with Airbnb's technology.

The report goes on to groan a lot about the alleged shifting of property use from long term rental to short term in the city, which again may annoy someone personally or upset their sense of the "way things ought to be."

But Airbnb allows for people to express their true desires, as both property controllers and property users, and needn't be condemned just for that reason. Unless you are the sort of civic busybody type who just knows exactly how everyone else's property should be used and what choices everyone else should make. Alas, America's government and media are all too full of those sorts of civic busybodies.

Gothamist joins in an attempt to make really great things seem really bad by throwing in arbitrary negatively valued phrases such as that the concentration of Airbnb rentals in lower Manhattan means that "Lower Manhattanites are taking a beating" and that it's "startling" that some people controlling lots of units use Airbnb to fill them with willing guests.

A ReasonTV video from last August on Airbnb—and its enemies:

NEXT: Reason-Rupe Ideological Typology: Where Do You Fit?

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. How successful does AirBnb need to get before taxing imputed rent becomes the next Leftist battlecry?

    1. What effect will it have on New Yorkers’ rents, with units being taken off the rental market and used for airBnb outsiders? A libertarian should know the answer.

      1. I thought that AirBnb was more like a bed and breakfast type type, thus the ‘Bnb’ part, you know, maybe some competition for hotels, but not anything to do with rent.

        But you appear to know better. So, explain it to us what this has to do with rent?

        1. It’s a general lodging service. There’s no resemblance to a bed & breakfast needed to operate via airBnb. The “Bnb” is like “Music” in MTV or “Chicken” in KFC, a historical residue, nothing more.

          1. Ok, but what does it have to do with rent? People who do AirBnb were going to turn their place into full time rental? That doesn’t sound right.

            1. Perhaps, or landlords wait till their tenants leases expire and switch to doing airBnb because it’s more profitable. Why does that not sound right? It seems the most likely explanation for that 6% of users offering hundreds of units.

          2. If they were long term rental agreements, i.e. over 30 days, then they wouldn’t be in violation of NY law. But the 72% figure says you’re wrong.

            1. Where did I say they were long term rental agreements? What I’m saying is, ordinary apartments get taken off the market to cater to visitors, staying one night, or a week, or a fortnight, or 5.16312658 nights, or whatever. Doesn’t matter. There’s a constant stream of customers, it’s friggin NYC. It’s going to be profitable.

              If they were long term rental agreements, i.e. over 30 days, then they wouldn’t be in violation of NY law.

              They wouldn’t be in violation of that particular NY law, but the 72% figure only requires that you be in violation of SOME law. No fire escape, no valuables safe, etc. Anything in the phonebook-sized Vampire State Code can count.

              1. So clearly you’re advocating for demolition of all NYC hotels. It’s for the renters after all.

              2. The issue is predominantly the length of stay. For the report itself:

                Most Short-Term Rentals
                Booked in New York Violated the
                Law. State and local
                laws in New York?including the Multiple Dwelling Law and the New York
                City Administrative Code?prohibit certain short-term rentals.
                During the Review Period,72 percent of
                units used as private short-term rentals on Airbnb appeared to violate these laws.2

                2. …Specifically, a “Private Room” rental for less than 30 days is legal only where a permanent resident was pr
                esent during the stay.

                1. Whatever, it’s irrelevant to my point. My argument doesn’t turn on the length of stay.

                  Tell me, who are those 6% of airBnb’ers who are offering hundreds of different units? Owners of 500 room family homes?

                  1. Again, you must support outlawing all hotels in NYC since they remove candidate rooms for long term renters. 500 rooms? Really?

                    Only 6 percent of hosts ran these large-scale operations but collected 37 percent of all the revenue. More than 100 users rented out 10 or more different apartments regularly through Airbnb. Together, they pulled in $59.4 million in revenue over the four-year span. And Airbnb’s most prolific host in New York made $6.8 million running 272 listings.

                    Your argument doesn’t turn on anything. You want to tell other people what to do with their property because you don’t like the competition. If they are not directly injuring you or your property, what gives you the right?

                  2. Tell me, who are those 6% of airBnb’ers who are offering hundreds of different units? Owners of 500 room family homes?

                    The dorms at NYU?

              3. Dear god… people might trade temporary lodging for money, leaving both parties happier than they were before?

                The Horror!

      2. Far less than the effect that rent control has had, but that assumes that one has a better than 3rd grade understanding of economics.

        1. Rent control affects what, 1% of NYC apartments? Probably less.

          1. And just how many units do you think AirBnB covers as a fraction of all rooms in NYC?

            1. More every day.

              Rent control’s effect on rent is not one-sided, either. The only way it can lessen the number of units available is if the renter would not live in NYC without the rent control. That’s probably true for a lot of them, but not all.

              1. “The only way it can lessen the number of units available is if the renter would not live in NYC without the rent control.”

                Oh dear sweet jeebus. You’re honestly claiming that price controls have NO effect on supply? Wow, just, wow.

                1. The only way it can lessen the number of units available is if the renter would not live in NYC without the rent control. That’s probably true for a lot of them, but not all.

            2. Here, I’ll help you with that:

              http://www.forbes.com/sites/el…..e-illegal/

              So about 35000 AirBnB listings versus (drum roll):

              http://www.nycrgb.org/html/res…..ntrol.html

              Yes. While rent control and rent stabilization both involve rent regulation, they have different sets of regulations. According to the 2011 NYC Housing and Vacancy Survey, there are about 38,000 rent controlled apartments compared to about one million rent stabilized apartments.

              Now tell me that rent stabilized is magical and doesn’t distort the market. Go ahead.

              1. Of course it distorts the market, just not as much as rental units taken off the market entirely would.

                Imagine that 5% of US gasoline capacity was forced to be sold for $2 a gallon. How would this distort the market? Well, it depends. Assuming that the sellers of the $2/gal gas are not selling any market-priced gas, and nobody is changing the amount of gas they buy, there would be NO effect. The remaining 95% of the buyers would be buying 95% of the gas, so the market price wouldn’t change.

                The distortion would be caused by people buying more $2/gal gas than they would if it were market priced, and by sellers of both $2/gal gas and market priced gas trying to make up for their lost profits on the open market. But these would both be small effects — there’s not much $2/gal gas to gorge on, and sellers are going to be punished in the market-priced segment if they do the latter very much. So there probably would be an effect in reality but it would be small.

                Now imagine there are no price controls, but US gas production drops by 5% because a refinery blows up or something. Prices are going to friggin skyrocket.

                1. Your best case argument argues against everything else you’ve posted. AirBnB is a tiny fraction of the housing units in NYC, roughly equivalent to the number of rent controlled units in NYC, which you seem to think has no effect on the market. So which is it? Is 1% a big deal or not? If it is, then rent control is at least as big a problem, and if you include rent stabilization, which is 30 times the size of either abnb or rent control, then the government interference in the NYC rental market completely dwarfs any “damage” done by abnb.

                  “Assuming that the sellers of the $2/gal gas are not selling any market-priced gas, and nobody is changing the amount of gas they buy, there would be NO effect.”

                  OK, let me use little words for you. If a producer is forced to sell a product for less money than a free market would allow, then that producer has less incentive to supply said product. If said producer sees the government directly manipulating the market,even if that market is only adjacent to his, don’t you think said producer will factor in increased risk to any future investment and invest less? Do you honestly not understand that very simple concept?

                2. Imagine that 5% of US gasoline capacity was forced to be sold for $2 a gallon. How would this distort the market? Well, it depends. Assuming that the sellers of the $2/gal gas are not selling any market-priced gas, and nobody is changing the amount of gas they buy, there would be NO effect. The remaining 95% of the buyers would be buying 95% of the gas, so the market price wouldn’t change.

                  You need to be beaten over the head with any Econ 101 textbook. This is Tony-level shameful.

          2. Rent control affects what, 1% of NYC apartments? Probably less.

            I’m still trying to find a “percentage” of apartments currently rent controlled. Here’s a flag figure:

            New York City, where over one million apartments are rent-regulated. In New York City, only buildings with six or more apartments are subject to rent stabilization.[2]

          3. Here we go:

            Table A shows that in 2011, New York City was
            home to 1,025,214 rent-regulated units, representing
            47 percent of the city’s total rental housing stock,

            according to the 2011 New York City Housing and
            Vacancy Survey.

            Unless I’m reading this wrong, almost 50% of the apartments in NYC are “rent regulated”

            http://furmancenter.org/files/…..INAL_4.pdf

  2. Translation: we squeezed our population for all the blood we could without losing votes, and when we were done with them we started bleeding visitors who don’t vote in our elections, and who have no choice but to stay here if they have business in NYC due to the horrid commutes.

    And now you’re cutting in to our action.

  3. Free market competition?

    Government! Save us!

    /entrenched interests

    Oh, and Naomi? I bet you “Brock” very well. Hubba hubba. (Yeah, I’ve got a thing for gingers.)

  4. The progressive on Stossel makes me want to pull my teeth out. Or punch him.

  5. Hotels are outrageously expensive in NYC and they will bleed you for every penny they can. Last time I was there I paid $350 for an average room, nothing fancy. I ordered room service, it was terrible, it was $36 for a salad and soup, there was a $9 tax on it and a $16 room service fee. So that was $61 for a salad and bowl of soup. I went down to the lounge to get a beer. $10 for a glass of beer.

    Maybe this is why AirBnb is gaining popularity.

    1. I ordered room service

      Unless you are slyly referring to an ad on craiglist, why would you ever do such a thing?

      1. I was hungry and tired as hell. I just arrived from a 4 hour drive in pouring rain in terrible traffic. It’s the only time I’ve ever done it, I was just trying to illustrate the money pit that place is. And then the stupid room service guy stood around wanting a tip.

    2. You were ordering room service in New York City? “The city that never sleeps”? I can’t fathom that.

        1. And I thought going to Olive Garden in Little Italy was bad.

  6. OT, but I agree with this take on LockMart’s fusion reactor.

    1. That was pretty much my take.. I hope they have secretly come up with something but god damn is fusion difficult.

      I have much more excitement for a truck size nuclear fission reactor in the 200 MWe range running on a floride and uranium based molten salt. A Canadian company is gunning to have a prototype in operation in the next 10 years. This concept is proven (was proven in the 60’s/70’s at Oak Ridge National Lab) and, in my opinion, fixes many of the issues with nuclear power (high capital cost, fuel melting if loss of coolant, hydrogen production in the core, high pressure coolant).

      I hope we get both this and Lockheeds fusion reactor. That would make for interesting times.

      1. Reading the history of Weinberg and the MSRE vs. the fast breeders just royally pisses me off. Here you’ve got this demonstrably superior design even without bred thorium and instead you stick with shitty PWR and BWR which are the nuclear equivalent of licking the outside of a 1″ jawbreaker and then throwing it away. Nixon really was a special kind of fucktard.

        GRRRR!!!

    2. “Lockheed Martin had revenues of $45bn last year, and profits of $2.9bn, so why are they seeking external funding, he asked. “That’s like Barack Obama asking me for a loan.”

      Obama isn’t really asking for a loan. He’s asking for more of a grant really. In fact, Obama considers the money to sort of, you know, already be his.

      1. “Lockheed Martin had revenues of $45bn last year, and profits of $2.9bn, so why are they seeking external funding, he asked. “That’s like Barack Obama asking me for a loan.”

        Same reason billionaire NFL owners want cities to pay for stadiums. Because they can.

  7. I can’t think of a reason that would force me to go to NYC. I haven’t lost anything there, don’t know anyone there, don’t care to see anything there, and basically refuse to go anywhere I can’t be armed.

    1. Last I knew, numbchucks were legal there.

      1. They’re not.

        1. ? 265.01 Criminal possession of a weapon in the fourth degree.
          A person is guilty of criminal possession of a weapon in the fourth
          degree when:
          (1) He or she possesses any firearm, electronic dart gun, electronic
          stun gun, gravity knife, switchblade knife, pilum ballistic knife, metal
          knuckle knife, cane sword, billy, blackjack, bludgeon, plastic knuckles,
          metal knuckles, chuka stick, sand bag, sandclub, wrist-brace type
          slingshot or slungshot, shirken or “Kung Fu star”

          1. And they Interpret “gravity knife” to basically cover every modern knife designed to open with one hand. It’s insane.
            http://blogs.villagevoice.com/…..p?page=all

      2. I believe after the ninja scares of the 80s, nunchucks are pretty much illegal everywhere.

        http://www.ci.bellevue.wa.us/O…..d-3197.pdf

        So are the knives they sell at Home Depot and fine Korean Grocery stores everywhere:

        or any knife having a blade which opens, or falls, or is ejected into position by the force of gravity, or by an outward, downward, or centrifugal thrust or movement

  8. Who wants to here about Obama’s 262 glorious accomplishments?

    http://pleasecutthecrap.com/obama-accomplishments/

    Featuring such historic firsts like:

    Appointed first openly transgender Cabinet Official in History.

    Improved relations with Middle East countries by appointing special envoys.

    Pushed through a tax credit to help people buy plug-in hybrid cars.

    And many more!

    1. openly transgender

      That’s a new one…seems like something that would be hard to be closeted about. Unless they mean “open” in the sense that Anthony Weiner is “openly male”.

    2. They should collect those 262 glorious accomplishments in a small pocket-sized book for portability. They should also make the cover bright red so it’s easy to find.

      1. I bought the Little Red Book in Tienanmen Square. Readable, but bad printing.

        And who will be O Ba Ma’s Red Guards? I’m guessing OFA.

  9. OT: It’s been a while since I’ve given you all some good Reddit insanity. In this edition, a comment gets linked to the /r/bestof subreddit (supposedly a collection of the best comments on Reddit, though they’re usually pretty terrible for one reason or another). The person who posts the bestof thread titles it “/u/nomoch explains how poverty, not bad policing, causes human trafficking.” /u/nomoch shows up to dispute that that was his argument. See my next comment.

  10. This comment has a +317 vote rating and Reddit Gold, which means someone paid money to make this comment look good

    “I did nothing of the sort.
    I said that capitalism causes poverty. That until we deal with the fact that it needs a sea of wretched humanity to function we will never deal with the most disgusting symptoms like human trafficking and child prostitution. And if we use only police solutions we will make the lives of those already desperately poor even worse.
    And, contrary to the dozens of comments already in that thread and the ones which will appear here shortly, that this isn’t a bug but a feature of the system. You need desperate people to make a business like Nike’s possible because no one who is not close to starvation would ever willingly work in a mind numbing job for 14 hours a day while being payed just enough to not starve in conditions that will more than likely kill them in a decade or so.
    Saying that this is “just a distribution problem” because we “already grow enough food to feed 10 billion people” completely misses the point. We could grow food for 100 billion with ten times the infrastructure in the world. You will still have a population close to starvation in every country because without it the system will break down, as happened in the 1960’s in America and the 1980’s in the USSR. If you don’t believe me go to your local soup kitchen and ask how many people there have jobs during the day.”

    1. Link:

      http://np.reddit.com/r/bestof/…..?context=1

      Someone else replied with a bit of sanity, and was promptly downvoted.

      1. Ten Places Capitalism Touched You?

        1. That better not be a slideshow list! 😉

    2. Nike would not exist if not for the non-starving people who buy the shoes. And if they didn’t buy them, the Nike factory workers would be back to spending all day staring a water buffalo’s ass. If they were lucky.

      1. Clearly poverty didn’t exist in these places until foreign corporations introduced capitalism!

        /sarc

      2. These people seem to get to a point and then stop thinking. They think that if Nike didn’t exist, these people would be living nice middle class lives like most Americans. It hurts my brain to attempt to figure out how they get to these conclusions.

        1. They aren’t using their brains to get to those conclusions.

    3. More gems from History According to Progs:

      “The US under the early industrial revolution stagnated in a hellhole until the cold war between the corporations and the unions finally turned outright violent. The government turned decidedly more socialist just to keep citizens from killing each other, and only then did the economy turn up. Given, WWII helped a lot, but it only sped up the process; there was measurable improvement years before.”

      1. I don’t even know where to begin with that.

      2. Das ist nicht nur nicht richtig, es ist nicht einmal falsch!

    4. Pearls of Wisdom

      “If the governments in those nations truly gave a shit about their people they would raise the minimum wage such that subsistsence wages were not possible.”

      Yeah, right on! The only way it could is if the corporations decide to outsource somewhere else. But that could NEVER happen!

    5. “Name me one country which has enriched its citizens while under capitalism red in tooth and claw. And I mean enriched, as in increased their disposable income, not just stretched the same income a bit by technological advance.
      You certainly can’t use America because the wages of all workers have stagnated for 20 years there and those for men for over 40 years.
      The only countries to get out of poverty are those which restrained capitalism and introduced as many socialist programs as they could..”

      BAHAHAHAHAHAHAHAHAHA!

      1. Mind-boggling. The dumbest part is his argument of how America doesn’t count because of stagnant male wages for the last 40 years, and how socialist programs are the reason for all countries who got out of poverty. Given that the US had very little social welfare spending besides Social Security until the Great Society, is he really crediting the 10 years between the advent of the Great Society and 1974 with the all of the poverty elimination that has happened in US history?

        1. *Extra “the” in the last sentence

  11. New York officials never rest, do they?

    Do some of these people listing their sewing rooms on AirBnB also have sugary drinks in their refrigerators? And could they be offering them to these guests? We could have a singularity of unregulated activity occurring here.

  12. OT: The wife just started Girls. I know there’s several reasonoids here that have slogged through an entire season or more. How bad is it going to get? I’ve only watched a minute or two while flipping and Dunham’s written drivel that’s been posted here.

    1. I talked my Mom into watching it with me one time. Within a minute she was shrieking in horror and I was laughing uncontrollably.

      “Don’t look at it, Marion!”

    2. I watched an episode and to Dunham’s credit on the writing and themes, her own character wasn’t particularly sympathetic.

      Unfortunately the whole thing, regardless of what you think of Dunham’s politics is that typical post-coming-of-age fare that almost every generation puts out in their early to mid-20s… that kind of angst-ey shit where they pontificate about “adult matters” that become really irritating when you actually reach real adulthood, sometime in your late 30s/early 40s.

Please to post comments

Comments are closed.