Airbnb properties have long been a concern in real estate circles. The main concern is that the existence of these vacation properties lowers property values and raises the cost of living for long-term renters.
A new study notes that Airbnb does have an impact on housing prices and rents—but it’s not what most expected. The impact is stronger in areas with fewer owner-occupiers, such as vacation destination towns. Also, Airbnb contributes to an increase in the supply of short-term rentals, while decreasing the long-term supply of rentals.
According to new research, the presence of an Airbnb property can contribute to an increase in housing prices and rental rates in a neighborhood. But it depends on where the property is located.
Impact of Home-sharing
The study sought to assess the impact of home-sharing on residential house prices and rents. It uses data from Airbnb listings from across the United States. Researchers found that in local neighborhoods with a lower share of owner-occupancy, Airbnb had a higher impact on rising housing prices and rents. In areas with a higher share of owner-occupancy, Airbnb had somewhat less of an impact on property prices and rents.
The research study is published in the INFORMS journal Marketing Science: The Effect of Home-Sharing on House Prices and Rents: Evidence from Airbnb.
The study found that the supply of housing wasn’t impacted by the entry of an Airbnb property in a neighborhood. Airbnb listings tend to increase the supply of short-term rental units, while contributing to a decrease the supply of long-term rental units. Home prices have been rising in most areas of the country due to a lack of inventory and high demand.
“Home-sharing has been the subject of its share of criticism,” said the authors. “Critics have alleged that home-sharing platforms raise the cost of living for local renters while primarily benefiting local landlords and nonresident tourists. But it is an empirical question.” Regardless, the impact Airbnb has on housing prices is good news.
Data from Zillow and Airbnb
The researchers used data from U.S. properties listed on Airbnb website between 2012 and 2016. Researchers also used Zillow to obtain house price and rental rate indices. All data is analyzed down to the zip code-year-month level of detail.
The study found that the number of Airbnb listings in some zip codes are positively associated with both property price increases and rental rates. “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.”