The Future of Economics is Happening, Now!
Although it goes by many names today – the gig economy, the peer economy, the collaborative economy, or ‘collaborative consumption’ – it all refers to the same thing, namely, the sharing economy. But what is the ‘sharing economy’ and how does it affect the Airbnb community and the Real Estate markets?
The ‘Gig’ or ‘Sharing’ Economy
Fast Company contributor, Rachael Botsman, states that no matter what it has been called, the sharing economy involves different realms such as: peer-to-peer lending, crowdfunding, apartment/house-sharing platforms, ridesharing, and carsharing, coworking, reselling and trading, knowledge and talent sharing, and niche services – which comprise a network.
The common thread connecting the sharing economy is, unsurprisingly, the Internet. Although there are advantages such as cheaper goods and services, extra income, better opportunities, and stronger communities, there are also disadvantages involving privacy and safety concerns, fewer guarantees in being paid or compensated, differences in understanding the cooperation of deals, and market disruptions and distortions.
Nonetheless, the evolving shared economy continues to modify the way we work, earn, and consume which has pushed us to usher in greater flexibility and time management at work and at home, be less concerned about owning valuable possessions or real estate, and run businesses that are more adaptable to the ever-changing economic climate.
Airbnb and the Sharing Economy
As an alternative to hotel accommodations, Airbnb offered many travelers a cheaper, higher quality stay in various cities throughout the world. For a time, it was in perfect balance. However, many residents realized that such accommodations were making it more difficult to find affordable rental units in large cities like Toronto.
While Airbnb and its rivals normally help hosts pay the bills, affordable housing activists have long said these platforms contribute to the country’s housing shortage and urban gentrification, especially when they’re used by big landlords offering multiple units. One consequence of the sudden travel downturn could be a surge in units available for traditional rentals, which could potentially lower rental prices. However, experts caution it’s still too early to know how the market will shift in the long-term.
In cities like New Orleans, Dublin, and Los Angeles, Airbnb landlords are converting to long term rentals at reduced rates which has helped considerably with lower rental rates for newcomers. The co-founder of Keep Neighborhoods First, Judy Goldman, who advocates against what she calls “commercialized short-term rental abuse,” says she’s heard of similar activities occurring in Los Angeles:
“What we’re hearing here in L.A. is that the small mom-and-pop operators are quickly, many of them, converting their short-term rentals to longer term use,” she says. “It’s going to be a very helpful way to restore our housing, which has really suffered.”
Closer to home, in Ontario, we’re starting to see a similar trend as a decline in Airbnb bookings has led to greater availability for rental opportunities:
“We are seeing an incredible new amount of inventory of furnished units come onto the long-term rental market over the last few months,” said Andrew Harrild, co-founder of Condos.ca. “At Ice Condos, for example, there are now 147 units available for rent, which is unbelievable.”
The trend is evident worldwide as some are predicting a potential return to more standard hotel stays as the economy recovers with easing travel restrictions:
“People might be less inclined to book Airbnb after the recovery due to perceived cleanliness issues,” says Michael O’Regan, senior lecturer in marketing at the U.K.’s Bournemouth University. “They simply can’t guarantee a deep clean on a host-to-host basis after every guest.”
A return to hotel accommodations would certainly help the tax base of any municipality and also support far greater workers within a community. Overall, it looks like a post-COVID real estate market – at least for the foreseeable future – will see more Airbnb units renting for the long term:
Indeed, there’s already been much online discussion — some of it gleeful — of Airbnb units filtering back onto the long-term rental market. In Dublin, for example, the number of one- and two-bedroom apartments available for rent in Central Dublin hit a five-year high in March, with several of the listing photos betraying the apartments’ past as tourist accommodation.
Into the Great Unknown
None of us really knows what the future will look like when we get to the other side of this pandemic. But what we do know is that the sharing or gig economy is going through transformations that will ultimately lead to a better, fairer, and more sustainable future.
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