A preliminary analysis of 100 U.S. metro areas suggests Airbnb bears at least some responsibility for soaring housing costs.
Regulators wary that Airbnb is eroding affordable housing availability have a new piece of evidence in their arsenal: A new study finds that spikes in Airbnb listings were strongly linked to rent increases in some of the largest US metro areas.
The new independent study, which has not yet been peer reviewed, is the first to analyze the impact of Airbnb listings by ZIP code in 100 of the largest metro areas. Using rental and home price data from Zillow, the researchers found that for every 10 percent growth in Airbnb listings, a ZIP code’s average rent increased by 0.4 percent.
Authors Kyle Barron, a research assistant in economics at MIT; Edward Kung, an assistant professor of economics at UCLA; and Davide Proserpio, an assistant professor of business at USC, analyzed data from 2012 and 2016 to consider a causal relationship between Airbnb growth and housing prices. They caution that the study’s findings are still preliminary.
Previous research in cities with tight rental markets has found a link between Airbnb growth and increased housing costs. A study released last year by Keren Horn and Mark Merante found that Airbnb had a direct impact on increased housing prices in Boston.
Horn, who is an assistant professor of Economics at the University of Massachusetts, said hers and this new study are two of the first to find a causal relationship between Airbnb listings and housing prices, rather than just a correlation between the two.
“The problem with identifying the impact of Airbnb on rents is that cities are becoming more expensive and at the same time more tourists are coming to visit them,” Horn said. “If you just look at these correlations you’d think they’re moving in the same direction. But is it really Airbnb that’s having a direct effect on rents?”
In the new study, the researchers scraped the ZIP codes with the greatest number of listings on Airbnb and Zillow. Using data on rental rates and house prices from Zillow, they were able to compare a given ZIP code’s annual Airbnb growth to its annual increase in rental rates and house prices. (Note that because the study uses data from Zillow, this averages all types of properties for sale, from one bedroom houses to single family homes, which can vary by ZIP code.)
These small percentage increases have a noticeable dollar impact—especially on neighborhoods popular with tourists. There’s a reason you may have heard more French and German on the sidewalks of Bushwick and Bed-Stuy: the number of Airbnb listings in those central Brooklyn neighborhoods grew by a whopping 41 percent, on average, every year from 2012 to 2016.
During that same period, rents in these neighborhoods grew about 7.7 percent a year from a baseline average of $1,712 per month in 2012—that’s an estimated average increase of $131 every year.
But not all of that growth is attributable to Airbnb. Controlling for other factors that influence housing costs—such as population growth, income, and employment rates—the findings would suggest that Airbnb was responsible for an estimated $27 of this increase.
How might Airbnb increase rents? Primarily by taking units off the market. In 2015, seekers of long-term housing in ZIP codes with average growth in Airbnb listings—think of suburban communities like Pleasant Valley, in the Austin, Texas metro—would have found one Airbnb unit for every 13 houses that were vacant-for-rent in their neighborhood. In the ZIP codes that saw the highest relative growth rate of Airbnbs—such as vacation hotspots like Sunset Beach in St. Petersberg, Florida—as much as 50 percent of potentially available homes were placed on Airbnb instead of the long-term rental market.
The study, however, finds that two different sorts of Airbnb listings have different impacts.
ZIP codes where the majority of landlords are owner-occupiers—those who rent out an extra room or rent for short periods while they are away—experienced minimal increases in housing costs. But ZIP codes with more absentee landlords—those who do not live in the homes they rent out—were especially influenced by increased Airbnb listings.
Huntington Beach, California, for example, has a high owner-occupancy rate of 51 percent. Between 2012 and 2016, Huntington Beach experienced 48 percent growth in Airbnb listings, but rent prices grew only 2.7 percent a year.
Hollywood, on the other hand, has a notably low owner-occupancy rate of only 5 percent. In turn, the number of Airbnb listings grew by an average of 50 percent per year, and rent prices grew about 6.4 percent.
“It has been argued that Airbnb income allows some hosts to stay in their homes in rapidly appreciating housing markets,” said Edward Kung, one of the study’s authors. But to assess this and other potential economic benefits of Airbnb to communities, he says, there needs to be more research on the home-sharing service, including on the extra income hosts can generate through Airbnb, and how it affects their lives.
Airbnb has been the world’s largest home-sharing platform for nearly a decade. Since its founding in 2008, the company has faced harsh criticism for skirting traditional rental regulations and draining housing supplies in cities where rent prices already soar. The company has taken many of its critics head on: most recently, it started paying hotel tax—as of May 15, they had paid nearly a quarter of a billion dollars in hotel and tourist taxes globally. This helps the home-sharing service to alleviate some of its impacts, like raised housing costs.
The company has also adopted a “one host, one home” policy in San Francisco and New York—limiting hosts from listing rentals at more than one address—to account for the uniquely constrained supply of housing in these cities.
Some city officials are exploring additional regulation in anticipation of impacts like the one found by this study. Barron, Kung, and Proserpio’s close-up examination of ZIP code-level trends may offer guidance for legislators. Their research suggests that while Airbnb growth is a factor, it is not primarily to blame for shutout rental prices. But how regulators and policymakers attempt to mitigate its effect may differ between neighborhoods.
“They [Airbnb] have the advantage of working in lots of cities,” Horn said. “They could be a data steward and also a policy proposal steward.”
Horn suggested data-sharing agreements between Airbnb and cities might be key as leaders seek reliable data on where listings are spreading—and where apartments, in turn, might disappear.
“A lot of cities aren’t responding well to Airbnb,” she added, “that’s definitely not good for them, and maybe it’s not good for the city, either.”
CORRECTION: A previous version of this story mischaracterized the neighborhoods with the highest relative growth rates of Airbnbs. In those ZIP codes, as much as 50 percent of available homes were placed on Airbnb rather than the long-term rental market.