Evidence of Impact
We assess the impact of home-sharing on residential house prices and rental rates. Using a comprehensive dataset comprised of Airbnb listings from the entire United States, we regress zipcode level house prices and rental rates on the number of Airbnb listings, using fixed effects to control for permanent differ- ences across zipcodes as well as arbitrary CBSA level time trends, and using an instrumental variable based on Google search interest for Airbnb to control for any remaining endogeneity. We find that a 10% increase in Airbnb listings leads to a 0.42% increase in rents and a 0.76% increase in house prices. Moreover, we find that the effect of Airbnb is smaller in zipcodes with a larger share of owner-occupiers, a result consistent with absentee landlords taking their homes away from the long-term rental market and listing them on Airbnb. We present a simple model that rationalizes these findings.
Through the WI Lens
This article is of particular relevance for hotels in particular and the hospitality industry in general. If it is proven further that Airbnb increases home prices and rental rates, suggesting that policy-makers and regulators will constrain its development – a move that is long-term positive for hotels and other “official” forms of accommodation. A 10% increase in Airbnb listings leading to a 0.39% increase in rents and a 0.64% increase in house prices (in a specific region in the US) may not seem like by a big increase, but it exacerbates issues of affordability that are politically and socially sensitive. Most likely, similar studies will now be undertaken in other regions and countries, encouraging policy-makers to rein in the development of Airbnb, or at the very least to stop the conversion of properties from long-term rental units to short-term rental units (therefore favouring hotels). One thing is sure: the backlash against Airbnb will intensify, prompting policy-makers to act.
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