Study Finds Presence of Short-Term Rentals Associated with Higher Property Prices

An article in Housing Policy Debate, “Examining the Impact of Short-Term Rentals on Housing Prices in Washington, DC: Implications for Housing Policy and Equity,” finds that having short-term rentals (STRs) in a neighborhood can significantly increase home prices. Each additional Airbnb listing within 200 feet of a property is associated with a price increase of 0.78%. The author states that the increase in housing prices could harm first-time homebuyers and low-income renters if the price premium results in higher rent.

The author used third-party web-scraping tools to gather Airbnb data, at half-year intervals from early 2015 to mid-2017, to represent all Airbnb listings in Washington, DC. This data was combined with a data set of 12,680 property sales records from September 2014 to July 2017. Neighborhood characteristics and underlying population attributes at the census tract level were also included.

The author measured Airbnb density—the number of listings within a certain buffer distance of a property sales point (for each sale, the author measured density at 100, 200, 500, and 1,000 feet). The average number of Airbnb listings within 100 feet of a single-family property sale is 0.21 and the average number within 200 feet is 0.85. At all buffer sizes, Airbnb density was positively correlated with property prices.

The author constructed three models to further investigate the impact of Airbnb. These models control for housing attributes, neighborhood factors, sociodemographic features at the census tract level, and housing market fluctuations over time. All three models found statistically significant, positive associations between Airbnb density and property prices.

In Washington DC as a whole, Airbnb alone could account for an increase in single-family home prices of 0.66% to 2.24%. In tourist hot spots, Airbnb was responsible for property price increases of more than 5%. Some neighborhoods with significant Hispanic and African American populations have experienced price inflation greater than 3% because of STRs.

The author notes that DC’s regulatory framework discourages the acquisition of properties for exclusive use as STRs because listings can only be rented for 90 business days per calendar year. They also note that DC’s rent control regulations would likely blunt the impact of a positive price premium on rents. The author argues that moderate STR regulation would be necessary to cool STR-related housing investment and reduce the possibility that it leads to the displacement of low-income renters.

The paper is at: