Can Restricting Property Use Be Value Enhancing? Evidence from Short-Term Rental Regulation

Abstract

Short-term rentals, where tourists stay at private residences, have become ubiquitous over the past decade. Many communities are divided over the tradeoffs between a property owner's rights and nuisance problems created by transient populations in residential neighborhoods. This paper empirically examines the effects of regulation restricting short-term rentals on property sales price, using a unique dataset and policy experiment from Anna Maria Island, Florida. We show that nonresident ownership of properties on the Island decreased following the rental regulation, and that the regulation decreased property values except in areas where the density of nonresident-owned properties in a neighborhood was quite high.

Keywords: Property rights, zoning laws, housing market, sharing economy

JEL Classification: K11, R31, R52