Gentrification and Short-Term Rentals: Re-Assessing the Rent Gap in Urban Centers

• In Event: 1451 - Community and Urban Sociology Section Roundtables (1 hour)
  In Refereed Roundtable 60min: 5. Gentrification Today

Abstract

Over the last few years, the regulation of short-term rentals has become a central policy issue for municipal governments around the world. The regulatory action is a belated response to the rapid expansion of this market, which has altered the economics of urban housing in novel ways. Facilitated by online platforms, short-term rentals now annually channel billions of dollars into cities. Thousands of housing units, which would otherwise be available for long-term tenants, serve this market exclusively. These platforms allow urban real estate to be monetized with minimal re-investment or long-term in-migration of higher-class residents. By connecting urban locales to the global flow of people and capital, rental platforms generate significant incentives for rapid and widespread gentrification and threaten to increase inequality within cities and displace disadvantaged populations. Wachsmuth and Weisler (2018) argue that Airbnb has created a significant “rent gap” in some areas of New York City, with short terms rentals bringing in significantly greater revenue than long-term ones. In this paper, I present the first large-scale analysis of the gentrification dynamics generated by short-term rentals in the ten largest urban markets for Airbnb in the US. Using data on Airbnb activity from 2015 and 2016, I show that the rent gap generated by short-term rentals is a concern across all 10 geographies, with housing units converted into exclusively short-term properties earning up to three times the median rent in some neighborhoods. These units have also come to represent a significant portion of the total rental revenue across these markets, and they occupy a large share of rental properties without long-term tenants. I then propose a new way to measure the gentrification impacts of short-term rentals, which highlights the constant, and increasing pressures for gentrification generated by this practice.

Author

• Mehmet Cansoy, Fairfield University