The Attack on Airbnb

The room-sharing service Airbnb has become controversial in high-cost cities like San Francisco and New York, in part because of concerns about affordable housing. In fact, U.S. Senator Dianne Feinstein has recently written an op-ed attacking Airbnb. (In the interests of full disclosure, I note that both I and the Senator have financial axes to grind: I am an Airbnb customer, and Sen. Feinstein is an investor in a large hotel).

The public benefits of Airbnb should be fairly obvious to anyone who is not a hotel owner. Visitors and new movers can pay less for their lodging by renting a room in someone's apartment than by renting a hotel room, thus enabling longer trips, thus enabling city economies to benefit from more tourism. So it might appear that Airbnb might make housing more affordable, at least for visitors and movers. But Feinstein argues that Airbnb allows landlords to "vacate their units and rent them out to hotel users, further increasing the cost of living." In other words, Airnbnb opponents see lodging as a zero-sum game: what benefits visitors must harm existing renters. By this logic, govenrment should just outlaw hotels, since every hotel unit is a potential apartment.

More seriously, this argument assumes that every room rented to a visitor would otherwise be rented to a roommate. But the two "products" are not reasonably interchangeable; roommates involve advantages (such as familiarity and a regular rent check every month) and disadvantages (such as a 365-day relationship) that differ from those of Airbnb "temporary roommates."

Moreover, the supply of Airbnb rooms is actually pretty limited; for example, I just searched for Airbnb rooms renting for under $100 (and thus cheaper than private hotels) and found a grand total of 486 rooms (not counting entire apartments, which compete more with ordinary landlords than with hotels). When I searched for rooms cheaper than the cheapest hotel on hotels.com, I found only 74 rentals- hardly enough to affect housing prices.

Feinstein argues that renters should at least be kept out of single-family neighborhoods, because temporary renters would create "a blanket commercialization of our neighborhoods. " This argument makes no sense to me; renting a room in a house is no more "commercial" than renting the whole house.