A new study by Kyle Barron, Edward Kung, and Davide Prosperpio, The Sharing Economy and Housing Affordability: Evidence from Airbnb, finds that a 10% increase in Airbnb listings in a neighborhood leads to a 0.39% increase in rents. Airbnb’s impact is stronger in neighborhoods with more absentee landlords and weaker in neighborhoods with more owner-occupants. The findings suggest that Airbnb incentivizes absentee landlords to remove their properties from the long-term rental market and rent them to short-term tenants, causing rents for long-term leases to increase.
Airbnb listings are also associated with higher home values, because of homeowners’ potential profits through short-term leasing or higher long-term rents. A 10% increase in Airbnb listings in a neighborhood is associated with a 0.65% increase in home values.
The results show that Airbnb has a negative price impact for renters, but a positive value impact for current homeowners. The authors argue that home-sharing policies should attempt to limit the number of long-term rental homes that shift to the short-term market. For example, occupancy taxes could be charged to absentee owners who list an entire home on Airbnb to reduce the incentive for them to use Airbnb rather than keep the home in the long-term rental market, but not charged to owners who use Airbnb and occupy their property. Owner-occupied housing is less likely to be available for a long-term lease. The authors call for additional research to examine other effects of Airbnb for a more complete understanding of its costs and benefits.
The Sharing Economy and Housing Affordability: Evidence from Airbnb is available at: http://bit.ly/2weLQAl