Call it a case of dueling reports. In June, AirBnB released a report finding that its platform “combats middle class income stagnation” by allowing home-owners to leverage their desirable property for more money. Around the same time, the Center for an Urban Future released its annual Creative New York report, an overview of the city’s creative sector that forms an important economic asset. The latter’s findings include a section on “the affordability crisis” of “exorbitant rents, a shortage of space and high costs;” the former’s, on “The Problem of Middle-Class Incomes.”
It’s difficult not to connect the dots between these two opposing sides. New York City’s real estate market has long thrived on artists—think Soho transforming from derelict loft studios to condos and luxury fashion brands. But AirBnB is increasing the pressure on cool space in the city by allowing its owners to capitalize on their real estate. As a business model, this isn’t a problem (the company is now valued at over $25 billion, more than any hotel chain).
AirBnB is increasing the pressure on cool space in the city by allowing its owners to capitalize on their real estate.
To solve the looming threat that these creative types won’t be able to afford their increasing rents, AirBnB might suggest that artists and galleries simply leverage their property, by renting it out and netting the average gain of $7,530 a year that the report notes. But that self-serving argument, packaged in seemingly unbiased economic research, ignores the vicious cycle of gentrification. As Vice described the consequences of renting out your space: “In an attempt to make an extra buck, you may be slowly screwing yourself out of the market.”
This effect has been quantified, in fact. A 2015 study that AirBnB also commissioned found that if spaces were being solely rented out rather than shared or lived in part time, rents would go up $24 a month in New York and $76 a month in San Francisco. It might not be a huge increase, but the effect is intensified for desirable areas. “It’s not an affordability issue. It’s a luxury neighborhood issue or a bohemian neighborhood issue,” Thomas Davidoff, an assistant professor at the Sauder School of Business, told the Wall Street Journal.
The bohemian neighborhood Davidoff speaks of is, much like Soho, where artists find themselves living, working, and opening up galleries—the very area AirBnB wants to cultivate. The populations of creatives and AirBnB hosts indeed overlap quite a bit. In Los Angeles, 43 percent of hosts “work in the arts, entertainment, and recreation occupations,” according to the company’s report. In Portland, Oregon, 45 percent of hosts are “self-employed, contractors, or part-time workers.”
The AirBnB report is marked by a strange personality split, pointing out the sad state of the middle class and then trumpeting its own only barely salutary effects on household income. The major conclusion is that, if you live in a desirable region, by renting out a spare room in your house, you can make up for income stagnation. “Historically, middle-class incomes have risen in America. Yet, median income has been relatively stagnant over the last few decades,” the report states. “The large majority of AirBnB hosts are working families in the broad middle class … significant fractions have incomes at or below the median household incomes for their cities.”
In desirable urban space, the company is helping to breed a gentrified monoculture that threatens the cultural diversity it piggybacks on as long as cities don’t take steps to balance its effects.
It’s a far cry from Uber’s ironically utopian language about turning drivers into entrepreneurs. The people who will suffer from AirBnB’s long-term effects are also those who are perpetuating them out of necessity. The start-up might find ways to compensate for economic pressure, but it is also intensifying it. While the company boasts about its $7,530 a year bonus for hosts, neighborhood rents in places like Brooklyn’s Williamsburg and Fort Greene have increased by as much as 75 percent, according to Creative New York; the home ownership that makes AirBnB legally feasible in these areas has come to seem all but impossible for the middle class.
AirBnB allows visitors instant access to creative spaces that traditionally take some inside knowledge to arrive at—friends or fellowships in the right places. More than a few arts workers I know have attempted to supplement their rent with AirBnB income, often to the detriment of their full-time or contract jobs (temporary hotels are hard work to maintain). Visual artists, too, divide and sublet their studio spaces both to subsidize their own rent and capitalize on the potential of their lease.
The overwhelming scale of AirBnB threatens even these small ecosystems, however. In desirable urban space, the company is helping to breed a gentrified monoculture that threatens the cultural diversity it piggybacks on as long as cities don’t take steps to balance its effects. The end result of an AirBnB’d neighborhood is not a profitable artist collective. Rather, it’s an international bedroom community of “post-tourist” upwardly mobile workers, an intermittently empty complex of condos for creatives who can parachute in, patronize local cafes, and then escape as quickly as they arrived.
Perhaps these guests won’t really understand the place they land in. But will it matter when everywhere stocks the same Nordic furniture, plays the same global pop music, and pours the same Portland coffee?
Disruptions is Kyle Chayka’s weekly column for Pacific Standard about personal technology and the way it influences our daily lives.
