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. “The response of rental rates to Airbnb could actually be zero if all landlords are owner-occupiers,” the study notes.
But it’s unlikely that Airbnb would eject such listings from its platform. As the blog FiveThirtyEight pointed out in August last year, 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,” says Nick Papas, a spokesman for the home-sharing platform.
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. In May, hosts descended on Albany to protest the New York law. Chicago, too, has seen a well-funded backlash to proposed home-sharing rules. Members of homeowners association Keep Chicago Livable filed a suit to stop a new home-sharing law that would create an additional tax and put limits on the number of units that a given building can rent out for the short term.
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,” says Keren Horn, assistant professor of economics at the University of Massachusetts Boston, who has conducted research on the effects of Airbnb on Boston-area rents. 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.
Correction: A previous version of this article incorrectly referred to USC professor David Prosperio as UNC professor Davide Proserpio.