Airbnb's Impact on Rental Rates
It’s Very Likely That Airbnb Is Causing Your Rent To Go Up, According To A New Study
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There’s been plenty
of debate in cities around the country in recent years over Airbnb’s
impact on neighborhoods, amid concerns that the home-sharing platform
accelerates gentrification and causes rents to increase. Now a new study from
academics at MIT, UCLA, and USC shows that Airbnb is indeed having an
impact on real estate prices.
The report found that in
the U.S. a 10% increase in Airbnb listings would lead to a 0.39% increase in
rents and a 0.64% increase in home prices in a zip code on average, meaning
neighborhoods with listings are becoming more valuable. “That’s not
insignificant, but that’s not huge,” Kyle Barron, a research assistant at MIT
and coauthor of the study, tells Fast Company. The research is sure
to fuel the debate over how Airbnb should be regulated, though it did not delve
into the platform’s economic impact on surrounding neighborhoods and
businesses.
Most noteworthy, though,
is that Airbnb’s impact on rents appears to be linked to the
availability of commercial listings
in a particular market. Barron, along with UCLA professor Edward Kung and
USC professor Davide Proserpio, scraped data from Zillow, Airbnb, the
Census Bureau, and Google Trends to understand rental trends down to the zip
code level. They found that the percent of non-owner-occupied units listed in a
given region determines the rate at which rents will increase. Rents rise more
heavily when there is a preponderance of home listings that the owner is
not living in. More specifically, the study indicates that rental rate
increases are tied to the number of landlords taking long-term inventory
and moving it to short-term markets like Airbnb or VRBO.
But it’s unlikely that
Airbnb would eject such listings from its platform. A significant portion of
Airbnb bookings are commercials listings—that
is, apartments or homes that primarily function as short-term rentals.
According to the data retrieved by FiveThirtyEight and AirDNA, commercial
listings make up as much as 46% of regional annual host revenue.
Airbnb has long
maintained that it benefits middle-class people who need the extra money they
earn through Airbnb to cover their expenses. “Airbnb makes housing more
affordable — countless families depend on Airbnb to pay their rent and stay in
their homes — and 95% of economists and housing experts surveyed said
home-sharing has no meaningful impact on rents.
The problem is that not
everyone on Airbnb is using the marketplace to shore up a gap in their
finances. Some people on Airbnb and other home rental sites are commercial landlords who are taking
long-term housing off the market to cash in on lucrative short-term rental
opportunities. Lawmakers in tourism-heavy urban hubs, like Honolulu or Los
Angeles, have the greatest challenges, according to the study. The popularity
of these places with tourists means that landlords are more likely to make that
switch to short-term rentals. It’s this very behavior that concerns lawmakers
as they think about how housing is allocated in the future.
In October, New York
State approved a law that penalizes people for renting out whole apartments for
less than 30 days. Meanwhile, in San Francisco, lawmakers are requiring hosts
to register with the city in hopes of preventing landlords from
shifting long-term housing to short-term markets. But such initiatives
face a wave of opposition funded in part by Airbnb, which has wisely
turned its cadre of hosts into a community of advocates for the platform.
Therein lies the
challenge of regulating home-sharing sites: Legislators have to contend
with mitigating the potential negative effects of short-term rentals, like
squeezing the availability of existing housing and raising rents,
while also appeasing homeowners, who want to earn the most money for the least
hassle.
Of course the absence of
housing isn’t Airbnb’s burden and arguably it and its users shouldn’t have to
suffer penalties for the failure of city and state officials to build enough
housing to satisfy demand.
It’s not Airbnb’s fault
that cities are bad at growing supply—but it doesn’t make the empirical facts
less true. Though is it regulators who have failed to build enough housing
or come up with a solution to mitigate constrained supply, it doesn’t mean they
can ignore the ways in which Airbnb affects the market. That means implementing
rules, unpopular though they may be with hosts, to restrict long-term housing
stock from flipping onto short-term markets and ultimately increasing
rents for locals.
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