No surprise: That Airbnb study of rentals in L.A. isn’t what it seems
The home-sharing company Airbnb has come under attack in some communities in Los Angeles and elsewhere for its putative negative impact on their quality of life. So it pushed back Tuesday with a study purporting to show that its influence is much more benign than critics say.
Should you accept the study as the last word on the subject? Plainly not. Indeed, Airbnb may have misrepresented the study, which is obviously a major problem.
Airbnb’s public announcement says it was the product of an effort in which “our team of data scientists worked with members of the UCLA Luskin School of Public Affairs. They analyzed Airbnb data, publicly available census and community survey data, as well as third-party data to comprehensively understand the impact of the Airbnb community on housing in Los Angeles.”
But Monkkonen told me he didn’t conduct the study or develop the data that was used. His role was limited to “giving [Airbnb] some feedback” about its analytical technique. He didn’t vouch for Airbnb’s data, which is private. “They could be lying about the data,” he conceded, “but assuming that they’re not,” his participation was “to confirm that their methodology made sense.”
When I read him Airbnb’s description of their relationship, he acknowledged that it’s possible for a reader to interpret the line, “They analyzed Airbnb data,” as implying wrongly that UCLA performed the analysis.
“It could be taken the wrong way,” he said, adding that he would discuss the matter with Airbnb.
Alison Schumer, an Airbnb spokeswoman, says the company didn’t intend to “insinuate anything. We’re not saying it’s [UCLA’s] study,” she told me. “It’s our study and we’re working with them.” She said Monkkonen “looked at our methods and our conclusion.”
The study is one of a familiar genre: the home-grown, self-interested “academic” study issued by businesses purporting to prove their virtues to a skeptical world. Airbnb and the ride-hailing service Uber seem to issue these by the ream. Often, the reports are based on proprietary data that outsiders can’t independently evaluate.
That’s the case with Airbnb’s latest paper, which aims to show that the incentives for residential building owners to convert their Los Angeles properties from long-term rental apartments to short-term “rogue hotels” are minimal. That’s important, because the rap against Airbnb -- and other short-term rental “platforms” -- is that an influx of transient tenants can bring strangers, noise and trash to places traditionally seen as neighborhoods of homes, not hostels.
The study is designed as a direct challenge to a report issued earlier this year by the Los Angeles Alliance for a New Economy, or LAANE. That report warned that “the large-scale conversion of residential units into tourist accommodations” would bring great costs to Los Angeles, including a tighter housing market, safety risks, and the loss of jobs and tax revenue.
LAANE questions whether Airbnb’s study ranks as an effective challenge to its own. “I would caution against taking at face value a company study based on data no one can see,” says Roy Samaan, the author of the LAANE report.
Airbnb’s study found that on average, a housing unit in the city of Los Angeles would have to be rented for 177 days a year on a short-term basis -- that is, through Airbnb -- to yield more income than as a long-term rental unit. The report says that’s too high a bar “to incentivize converting that unit from a long-term rental to a short-term rental.” In some high-demand neighborhoods, the break-even threshold is even higher: In Venice it’s 225 days, and in Marina del Rey 321. In others it’s lower -- 150 days in downtown, and only 103 days in Bel Air.
The numbers Airbnb used to estimate the income from short-term rentals in these neighborhoods are its own. Schumer says we should accept them. “It’s not in our vested interest to provide inaccurate data,” she says. Still, it’s proper to observe that Airbnb has firmly resisted giving government authorities access to raw data about its “hosts” and their transactions.
Some of the data in the Airbnb report is public, notably its estimates of long-term rental rates around the city. But Samaan questioned whether those numbers, which come from the apartment listing service Rent Jungle, are valid. He argues that using listed rents may overstate the real cost of an apartment, because it may leave out rent-controlled apartments, whose owners may face even greater incentives to evict long-term tenants and convert their units to would-be hotels.
Samaan pointed out that the 2014 market trends report for Los Angeles County by the USC Lusk Center for Real Estate shows much lower rental rates for several districts in the Airbnb study, suggesting that Airbnb is understating the incentives for conversion. For Hollywood, for example, Lusk estimates the “average effective rent” at $2,006, while Airbnb pegs it at $2,437. It’s impossible to make a district-by-district comparison across the city, however, because the two reports use different neighborhood boundaries.
In his introduction to the Airbnb report, UCLA’s Monkkonen asserts that the evidence is “sparse” that an increase in short-term rentals will exacerbate the housing affordability crisis in Los Angeles. Understanding the relationship is difficult because “the ability to rent space in one’s home or one’s entire home has changed people’s use of space.” But he says “the assumption that every advertisement of a complete unit for short-term rental is equivalent to the loss of a long-term rental unit is inaccurate.”
Monkkonen told me that LAANE probably overestimated the impact of short-term rentals on the housing market and that Airbnb’s estimate is “probably a lower bound,” though he thinks the real impact is closer to Airbnb’s estimate than LAANE’s.
None of this will make the jobs of city planners or lawmakers any easier as they ponder how to regulate the striking expansion of short-term rentals. Cities around the country are trying different methods. Santa Monica’s rules barring all rentals of 30 days or less where the primary occupant of the home or apartment is not present while allowing the sharing of a couch, spare room or backyard cottage, are among the strictest in the nation. San Francisco allows such rentals only for a limited number of days per year. Los Angeles City Councilman Mike Bonin has proposed restricting short-term rentals of a room or even a whole house only to owner-occupied units, which would eliminate strictly commercial operators. The question of how to enforce any of these rules remains open.
But the essential foundation for any such legislation is lacking: hard numbers on the nature, extent and price of apartment- and home-sharing. Airbnb and its rival firms have those numbers, but don’t share them. Until they open their books, the “studies” they base on them should be treated skeptically.
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