Thanks in large part to the success of online platforms like AirBnB and Vacation Rental by Owner, the market for short-term housing rentals STR has grown rapidly in recent years. As the market has grown, however, so too have concerns that STRs are impacting housing values, altering communities, and making it harder for long-term renters to find affordable housing options. This paper analyzes the impacts of short-term rentals on housing prices and provides insight about the broader implications of managing externalities created by peer-to-peer networks.
Most importantly, the paper seeks to understand whether STRs impact housing prices the same way in every city, or if those impacts vary based on local conditions such as the amenities a city offers. Morehouse examine the net impact of short-term rentals on local amenities by using zip-code-level data from Los Angeles County, California, to show the marginal effects of Airbnb listings on housing prices across localities. The paper uses a partial equilibrium model of the housing market that allows for heterogeneity based on homeowner type and amenities.
The authors also analyze the direct effects of a Santa Monica home-sharing ordinance, which bans the rental of an entire unit for less than 30 days and requires those who take part in home-sharing to get a business license from the city. The analysis presents a number of important findings, including:.
The results of this paper have broad implications for both housing policy and regulation of the peer-to-peer sharing economy. The impact of short-term rental markets on housing prices is not consistent across all jurisdictions. Rather, the impact depends on local conditions and amenities. As such, policies targeting short-term housing rentals and other peer-to-peer platforms such as Uber are likely to result in better outcomes when they are made by local decision-makers with better knowledge of local amenities.
Driven by the emergence of online platforms such as Airbnb and Vacation Rentals by Owner VRBO , short-term rentals STRs in the housing market have experienced significant global growth over the past decade. In contrast, long-term rentals generally involve leases with a term of at least one year. By reducing information costs, these markets enable mutually beneficial transactions between property owners and transient visitors, and thus increase the utilization of and economic surplus created by housing capacity.
