The Airbnb Effect: What it Means for Houston and Other Major US Cities
Airbnb started humbly enough. A couple of young entrepreneurs, a couple of airbeds, a crazy idea to supplement San Francisco’s pricey and limited accommodation marketplace, and a legacy was born. A side-hustle, really, though in the parlance of 2007, that term didn’t even exist yet. And it wasn’t quite the overnight success you would imagine.
After obtaining their first round of funding through Y-Combinator, it still took a couple of years to gain traction. Today, it is one of the most disruptive things to happen to the rental market – both short and long-term, and not everybody is on board.
To date, Airbnb has more than five million listings in 191 countries in the world. It has transformed the lives and the livelihoods of its hosts, many of whom confess to being insolvent prior to this opportunity.
In Houston, the number of Airbnb host properties is on the rise, as are the number of booked nights. Listings have increased by 150 percent in the past year, and in 2016 alone, they increased by 551 percent in anticipation of the Super Bowl. The total income for that week topped out at $4 million, coming from more than 8,000 visitors to the city.
So, on the plus side, it’s supporting the economy. It’s driving property values up and inviting investment. But what is the fallout?
Rental shortages highlight the lack of affordable housing
While conventional hotels initially took a hit from the Airbnb phenomenon, the impact seems to be greatest in the long-term rental market. Potential renters coming to areas that are popular Airbnb destinations are having trouble finding affordable accommodation as people have opted to rent out their spare bedroom, mother-in-law-suite or guest house to travelers who leap at the chance to stay for less than what they would pay at a typical hotel.
Income properties are being allocated to short-term housing rental at the expense of long-time residents, many of whom are having a difficult time finding affordable digs. When residents are priced out of the marketplace, they will go elsewhere. Over time, this may have a serious impact on some employers whose talent pool may be whittled down to nothing.
Because of this issue, many cities have taken a stand and demanded that Airbnb’s obtain a business license and pay the appropriate accommodation tax. While this may curb some of the side-hustle, the bigger problem is with developers and property managers who are buying buildings, evicting residents, and turning the entire thing into short-term accommodation.
On the plus side, it is creating a favorable environment for real estate buyers—and sellers—as the potential to generate income makes the prospect of buying a home viable. It is creating livelihoods for enterprising individuals who don’t mind being hospitable to strangers and, for some, it is helping them to build wealth and legacy.
Where is it all headed? Regulation seems imminent, and it’s sorely needed to bring some parity to the housing market in general.
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