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’?
The ‘Gig’ or ‘Sharing’ Economy
Fast Company contributor Rachael Botsman states that no matter what it’s 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 shared 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 regarding the cooperation of deals, and market disruptions and distortions.
Nonetheless, the evolving shared economy will modify the way we work, earn, and consume which will continue to usher in greater flexibility and time management at work and at home, less concern about owning valuable possessions or real estate, and businesses that are more adaptable to the ever-changing economic climate.
Airbnb and the Sharing Economy
As an alternative to hotel accommodations, Aribnb offered many travellers a cheaper, higher quality stay in various cities throughout the world. However, many activists were protesting 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. That means that apartments that would have been available for year-long leases are only available for short stints, causing the rental market to contract and overall prices to go up. 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 cofounder 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:
But the pandemic and Ontario’s subsequent ban on short-term rentals has led to such a sharp decline in the number of Airbnb bookings in major urban centres that those furnished units have migrated to the long-term rental market, according to data obtained by the Post from various condo rental sites and a real estate analytics company. “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.”
And, the trend is evident worldwide as some are predicting a potential return to more standard hotel stays as the economy recovers as travel restrictions begin to ease:
When travel to cities returns, it may not be Airbnb that reaps the benefits. Some experts think that due to fears about how consistently hygiene standards can be enforced in the home-share market, there may be a medium-term swing back toward traditional hotels once the travel industry starts to revive. “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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