Beyond the Stay: How Home-Sharing Platforms Reshape Residential Investment

Abstract

The emergence of platform-based home sharing, such as Airbnb, allows investors to purchase houses from residential markets and rent them out as transient accommodations. Debates on housing affordability have arisen due to redistributed home supply from residential markets to home-sharing platforms, drawing regulators' attention to Airbnb investors. Using granular home transaction and home-sharing property level data, we examine the home purchase and investment conversion activities of various types of Airbnb investors and their roles in shaping housing affordability issues. Utilizing a quasi-experimental opportunity in which several major U.S. cities capped the number of homes, an investor can list on Airbnb; we found an 11% drop in the overall transactions of home purchases. Such a decrease is primarily driven by local individual investors in the home-sharing markets. Our findings provide evidence that home-sharing platforms like Airbnb incentivize residential investment and shift the investment landscape in real estate markets. While cities are experimenting with home-sharing regulations, our study provides valuable insights into policy making and advocates home-sharing aligns with housing affordability.

Keywords: Digital platforms, Sharing economy, Peer-to-peer home sharing, Residential real estate, Airbnb, Zillow, Airbnb regulations