Airbnb Has Impact on Housing Prices, Rents

If Airbnb is in your neighborhood, it’s probably good news for home prices and rents, according to a new study from INFORMS.

The study, which assessed the impact of home-sharing on residential house prices and rents, found that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices at the median owner-occupancy rate.

“Ultimately, we found that the number of Airbnb listings in some zip codes were positively associated with both property price increases and rental rates,” said the authors of the study. “Concerns about the effect of Airbnb on the housing market do not appear unfounded.  But more research is needed into the long-run effects on the housing supply.”

INFORMS found that the effect of Airbnb listings on rental rates and house prices is higher in areas with a  lower owner-occupancy rate, such as destination towns. For zip codes with a 56% owner-occupancy rate (the 25th percentile), the effect of a 1% increase in Airbnb listings is 0.024% for rents and 0.037% for house prices. If a zip code has an 82% owner-occupancy rate (the 75th percentile), the effect of a 1% increase in Airbnb listings is only 0.014% for rents and 0.019% for house prices.

The study also found that Airbnb contributes to an increase in the supply of short-term rentals while decreasing the long-term supply of rentals.

“Home-sharing has been the subject of its share of criticism,” said the study’s authors.  “Critics have alleged that home-sharing platforms such as Airbnb raise the cost of living for local renters while primarily benefiting local landlords and non-resident tourists.  But whether or not home-sharing increases housing costs for local residents is an empirical question.”

Some local governments, however, seem to have already made up their minds and have struck a contentious stance with Airbnb. In July, for example, Florida’s Third District Court of Appeal affirmed a lower court ruling in favor of a homeowner and rejected the arguments made by the City of Miami Beach in a dispute over a short-term rental.

The conflict involved Miami Beach shutting down utility service to the property after the city alleged the property owner had not paid fines exceeding $200,000 for operating an Airbnb rental, according to court documents. The property was effectively shut down because it became inhabitable without those water and sewer services.

The ruling came amid a larger trend of cities seeking to regulate short-term rentals, instead of allowing the State of Florida to control enforcement. Homeowners and state government officials have said cities are not equipped to handle the enforcement of short-term rentals. 

While Airbnb has grown as a market force over the last decade, it has also been hit hard by the pandemic. The short-term rental service site experienced negative user growth as a result of the COVID-19 pandemic.

A late summer report from eMarketer projected Airbnb usage to fall 60% to 17 million US users in 2020. In 2019, the homeshare platform logged 42.2 million users.

“Airbnb has seen a significant decline in users because of the pandemic,” said Eric Haggstrom, eMarketer forecasting analyst at Insider Intelligence. “However, it is expected to outperform the travel industry as some people will continue to travel.”