Airbnb pledges $250M to build homes after years of being blamed for driving up housing costs

Airbnb is pledging $250 million to support housing projects after years of being blamed for worsening housing affordability in major cities.

The short-term rental giant will use the sum to provide gap financing for developments facing funding shortfalls, with affordable and mixed-income housing projects given priority.

Airbnb says the investment could unlock more than $5 billion in housing development over the next decade, targeting projects that have cleared most regulatory hurdles but are still waiting for the final funding needed to break ground.

The company estimates that around 750,000 multifamily homes across the US are in that position.

The Airbnb Housing Accelerator program’s first confirmed investment will be a $6.4 million commitment towards 201 affordable housing units in Austin, Texas, as part of a larger development with more than 500 homes.

‘Investment alone cannot solve the housing crisis. Durable change requires modernizing the rules that make it too expensive, too slow, and too difficult to build,’ Airbnb said in a press release.

‘Airbnb will support community leaders fighting to enact pro-housing reforms – zoning, permitting, and building code changes.’

It marks a major turnaround from CEO Brian Chesky’s comments in June, when he sought to push back against criticism of the company’s role in the housing crisis.

Speaking at the firm’s summer update, Chesky said he wanted to ‘dispel a common myth that our hosts are just a bunch of big, nameless, faceless property management companies.’

The boss acknowledged that management firms and corporate landlords operate properties on Airbnb, but also argued that they are heavily regulated.

He did concede that the company may contribute to housing shortages in some cases.

‘Are we ever part of the problem? Sometimes. But I think it’s overstated,’ Chesky said.

The company wants to help deal with the housing crisis, distributing the $250 million to developers to help bridge financing gaps in multifamily housing projects.

It plans to solicit applications from developers through the Housing Accelerator website and will focus on investments in the US at first.

Airbnb is also launching a $5 million Housing Innovation Prize, with five $1 million awards for companies and nonprofits developing technology aimed at making homes faster, cheaper and easier to build.

It will also support local efforts to change zoning, permitting and building codes, including measures aimed at allowing greater density and speeding up approvals.

The move comes after years of criticism that Airbnb’s short-term rentals have contributed to housing shortages and higher rents in major cities.

Critics argue that short-term rentals can take homes and apartments off the long-term housing market, fueling anger among residents and sparking protests where locals say they are being priced out.

That backlash has prompted cities around the world to impose increasingly strict restrictions on short-term rentals.

New York City, for example, has imposed some of the nation’s strictest rules on short-term rentals. 

Since September 2023, hosts offering stays of fewer than 30 days must register with the city and remain in the home during the stay, while only two guests are permitted at a time.

The rules also exempt certain hotels and traditional lodging establishments, including properties classified as Class B multiple dwellings and listed on the city’s Class B Multiple Dwellings List.

Airbnb has continued to clash with cities over how its properties should be regulated. 

In August, the company sent Salt Lake City a cease-and-desist letter accusing the city of violating its terms of service by creating what it called ‘fraudulent guest accounts’ to investigate suspected illegal short-term rentals, The Salt Lake Tribune reported.

The dispute came as Salt Lake City officials were cracking down on property owners violating local short-term rental rules, including in residential areas where such rentals are prohibited.

With the new incentive, Chesky hopes to offer a solution that works for both these affected cities and Airbnb. 

‘I’ve just lived in the crosshairs of the number one political issue in most major cities in America. And I can’t stare at the problem for much longer without Airbnb trying to offer up some solutions,’ he told the Wall Street Journal. 

‘I think it can benefit Airbnb, but I think this is primarily not about Airbnb.’