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.
“On such fragile foundations are built the first steps towards a more ethical kind of business, and who knows what virtuous circles might result?”
“Scientific evidence recently emerged that, contrary to earlier beliefs, Covid-19 can be spread by tiny droplets that we breathe out when we respire, called aerosols.”
“Economic wellbeing is part of the story, but it is also about finding less stressful lifestyles, in which healthy diet figures as a meaningful measure of success.”
“The industry has every asset needed to be a guiding light in the shift toward personal health priority. Will that become a prevention legacy, a ‘phoenix rising’ from the Covid-19 ashes?”
“Looking at the bigger picture, putting the measures in this order represents a lost opportunity that the pandemic could have offered for a cultural pivot pivot towards getting people more focused on their health, a powerful statement of intent.”
“Employment is necessary to fulfil our most basic human needs such as food and shelter. Any significant increase in long-term unemployment will spell a retrograde step for human wellbeing like no other.”
“All roads lead to a wellbeing anchor, whether that be economic/financial, physical, mental or emotional: all contribute to a progressive and inclusive cosmopolitan world. The answer should not be a choice of one or the other but of a joined up and compassionate solution for society, business and individuals.”
“The paradox is that we continue to do this in spite of recognising that striving to become ever-more productive is an intrinsically unhealthy behaviour, leading to stress and too often, a sense of failure.”
“The same broad-sweeping structural racism that enables police brutality against black Americans is also responsible for higher mortality among black Americans with Covid-19,” Maimuna Majumder, a Harvard epidemiologist working on the Covid-19 response, tells Vox.
The take-out from this? Wellbeing cannot exist at a more elevated level without our basic needs being met.