As Greater Hartford faces an incredible demand for affordable housing and long-term rentals, the high number of listings on Airbnb shows plenty of open properties or rentals available.

But according to experts, those Airbnb properties are contributing to the declining supply of long-term rentals.

A consumer affairs study from last year marked Connecticut as the worst state for renters. The report said the median gross rental on a two-bedroom apartment is $1,441, and the vacancy rate is 3.5%. It appears many potential sellers and landlords are content with the short-term benefits of Airbnb, and that has put a further squeeze on any person or family seeking long-term rentals.

“If someone takes a piece of property and converts it into an Airbnb, there’s one less house for sale, it’s one less apartment to be rented, ” said David Sacco, a University of New Haven lecturer in the finance, economics, management and entrepreneurship program. “The demand for rentals and the demand for housing in this area hasn’t changed. In fact, it’s probably gone up in the last four years as people have pushed out of New York City to places like Connecticut to work at home. There’s probably more demand for housing (in Connecticut) than there was four years ago.”

Sacco said the increase in Airbnbs has not only decreased apartment and housing availability but are also competition for hotels. He said real estate is all about supply and demand, and Airbnb properties are taking away supply from the long-term rental markets.

“There is also less housing for sale because people are essentially converting their property to short-term rentals. I think that’s an area where you have a finite supply issue and that exasperates it a little bit because there is this new opportunity for people to monetize property they own that just didn’t exist five or 10 years ago,” Sacco said.

He said because of the demand, prices have gone up.

“The national real estate market is really scattered. There are a lot of different regions and different regions have different issues. In the Northeast, we have a dense pack of real estate and housing that you are going to have anywhere in the country. There are basically no places to build new housing except where housing already exists,” Sacco said. “In other parts of the country there is plenty of room to expand. Places like Connecticut and most of the Northeast don’t have the ability to sprawl out like other areas.

Sacha Armstrong-Crockett, luxury real estate advisor with William Pitt Sotheby’s International, said she is seeing a rise in small investors in Hartford County.

“There’s an increased demand for rentals as buying a home becomes more challenging. Some markets are highly competitive, where, unfortunately, many people are either being priced out or repeatedly overlooked. A reliable and stable rental market is essential to meet the needs of those unable to buy,” Armstrong-Crockett said.

Any quick search on the Airbnb platform turns up dozens of listings for Hartford sites, from one room to entire homes. The prices also vary widely, with some rooms list for less than $50 per night, while homes can be hundreds of dollars a night. Others are listed by the week at higher prices. There also are many listings in surrounding towns.

Armstrong-Crockett said the rise of Airbnb presents both benefits and challenges in Hartford County.

“When it’s a small business or a source of supplemental income for families, it can positively contribute to a community,” she said.

“However, if it reaches the point when it reduces long-term rental options, it could affect local housing availability. As someone who works with investors and offers fair housing and first-time buyer workshops to renters, I understand both perspectives,” Armstrong-Crockett said. “Real estate is a financial product for property owners, but housing is also fundamentally a human right. Property owners who provide long-term, healthy and stable housing are important to any community.”

She said she is monitoring the historic Linus B. Plimpton House located at 847 Asylum St. in Hartford, which is being handled by Armstrong-Crockett’s colleague Ellen Sebastian. The house dates back to 1862.

“It’s a NINA property, meaning it must be owner-occupied. The home also features two stunning apartments. It’ll be fascinating to see how things unfold. My hope is that it becomes a space for multigenerational living or that someone creates a truly unique, high-end rental opportunities for the Hartford community,” Armstrong-Crockett said.

NINA is Northside Institutions Neighborhood Alliance, Inc. which is a Hartford non-profit that “rehabilitates blighted historic houses as owner-occupied opportunities for low-to-moderate-income households,” according to its website.

‘No place to build’

One solution is that the government gets involved, but Sacco said rent control may not be the answer and that there is “very little the government can do to alleviate the supply and demand issue.”

“They can do what the government in New York City has done for years and pose some form of rent price control,” Sacco said. “The problem with price control, which we see in New York City in spades, is that price control, all that they do is exacerbate the shortage because there is not going to be more supply that is created. In fact, there is going to be less supply as the prices are artificially held low and people have less incentive to rent their existing property and people have even less incentive to improve their existing properties to make them more attractive to people.

“Any time you put in price controls you end up with bigger shortages than you had before which doesn’t help the problem. It’s great for some and then everyone else gets priced out,” Sacco said. “You still have the same shortage, and it just gets exasperated, meaning ultimately the market has to come to an equilibrium which is tough in this area because there is no place to build. It’s hard to see where the growth is coming from. Unfortunately, more people, including young people, may consider moving away from this area.”

“I know we tend to think of it as bad with an exodus of people leaving the region that we are living in for real estate prices, but in reality, a lot economic value is being created as well for those people who can move and have more affordable housing and to those areas where real estate values start going up as well,” Sacco said.

Changing markets

David Haberfeld, a Bristol-based real estate investor and entrepreneur, runs Haberfeld Enterprises and said Airbnb is one of the contributing factors, but not a main reason, some buyers and renters are struggling to find housing or rent in the state.

“People think that there is this crazy housing shortage because there is no supply, but the supply is just not on the market,” Haberfeld said. “It’s not listed, so there is a shortage, but not a real shortage of units. People think that greedy landlords are the reason the prices are so high and think that Airbnb is taking away all of the apartments, but it’s just not true. They are contributing factors but not the main drivers.”

Other reasons Haberfeld mentioned sellers aren’t putting their houses on the market are higher interest rates and higher bank fees.

“Airbnbs are also necessary,” Haberfeld said. “I’m a fan and I’m an operator. People that have had a fire in their house and need a place to go and have a family that can’t fit into the hotel room, Airbnb is the right answer for them. Who wants to be the one to say you can’t have Airbnbs here so you have to leave our community, and you can’t stay here.

“Traveling nurses are another group,” he said. “Who wants to say traveling nurses cannot come to our area because we don’t allow Airbnb and hotels are too expensive for them. There is definitely a valid use for Airbnb in every community to have some.”

Haberfeld said tenant/landlord laws have pushed landlords toward renting Airbnbs. He switched to renting Airbnbs in Bristol during the eviction moratorium during the pandemic. He stopped renting his properties because he didn’t want to take the financial risk.

“The reason is you can’t make money in a long-term rental anymore and the tenant/landlord laws are so skewed and are so tenant friendly that landlords are shifting toward Airbnb because the government is abusing the landlords,” Haberfeld said. “Saying that you have to let them live here for free during the eviction moratorium. The Fair Rent Commissions are killing landlords.

“If the tide was to change and the government was to stop abusing landlords and if someone is not paying you can evict them in a timely manner,” he added. “The Fair Rent Commissions are almost unnecessary in my opinion. Some of these short-term rentals will come back to the market. Short-term rentals are about four times as much work as long-term rentals and not everyone wants to do it. But people are kind of forced to do it.”

Jacek Mikolajczyk, a realtor at Berkshire Hathaway, suggests that many potential sellers are also using Airbnb while waiting for a better environment to sell.

“We are seeing a little bit of a slowdown,” Mikolajczyk said. “Some of the homeowners are trying to survive and are trying to rent until the mortgage rates go back down and they can list their house again and get the most income they can for them.

“In this market, there are not too many homes listed,” he added. “People are thinking they are going to get the prices they were getting during COVID, but that’s not the case anymore and it’s hard to let them go for less, so they try an Airbnb. As soon as the mortgage rates go down and more buyers will come back and will start bidding again. … My team sells more than 100 homes per year. We see what is going on.”

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