The Visible Host: Does Race Guide Airbnb Rental Rates in San Francisco?

Journal of Housing Economics, 2017

DOI: 10.1016/j.jhe.2017.08.001

Posted: 15 May 2017 Last revised: 28 Aug 2017

See all articles by Venoo Kakar

Venoo Kakar

San Francisco State University

Joel Voelz

San Francisco State University

Julia Wu

San Francisco State University

Julisa Franco

San Francisco State University

Date Written: June 18, 2016

Abstract

Peer to Peer e-commerce is increasingly characterized by trends towards the personalization of buyers and sellers in the on-line marketplace. This personalization includes buyer reviews, personal pictures and profiles, and other biographical information intended to reduce buyers’ perceived “purchase risk” or to facilitate trust in the sellers. However, this phenomenon is transforming what started as an essentially “anonymous” market to one susceptible to traditional market failures, including potential racial discrimination, in a manner similar to its brick and mortar counterparts. In this paper, we examine the effect of on-line host information (race, gender, sexual orientation, etc.) on the price of available rental listings in San Francisco on Airbnb.com. We find that on average, Asian and Hispanic hosts charge 8%-10% lower prices relative to their White counterparts on equivalent rental properties, after controlling for all renter-available information on rental unit characteristics, as well as additional information on neighborhood property values, area demographics, and occupancy rates. We do not find any differences in occupancy rates between minority and White hosts. This may suggest that minorities price lower because they are forward-looking, perhaps due to an expectation of discrimination in the online marketplace or have a preference to increase demand to either maintain their target occupancy level or to attract a larger pool of potential renters to choose from. Overall, our findings are consistent with but not conclusive of a market test of potential racial discrimination affecting Hispanic Airbnb hosts, manifested in an anticipation of disparate market demand for their rentals, and responded to by lower listing prices.

Keywords: Airbnb, Discrimination, Race, Online marketplace

JEL Classification: D40, D47, J15, J71

Suggested Citation

Kakar, Venoo and Voelz, Joel and Wu, Julia and Franco, Julisa, The Visible Host: Does Race Guide Airbnb Rental Rates in San Francisco? (June 18, 2016). DOI: 10.1016/j.jhe.2017.08.001. Available at SSRN: https://ssrn.com/abstract=2967902 or http://dx.doi.org/10.2139/ssrn.2967902

Venoo Kakar (Contact Author)

San Francisco State University ( email )

1600 Holloway Avenue
San Francisco, CA 94132
United States
4154053461 (Phone)
4153381057 (Fax)

HOME PAGE: http://www.venookakar.com

Joel Voelz

San Francisco State University ( email )

1600 Holloway Avenue
San Francisco, CA 94132
United States

Julia Wu

San Francisco State University ( email )

1600 Holloway Avenue
San Francisco, CA 94132
United States

Julisa Franco

San Francisco State University ( email )

1600 Holloway Avenue
San Francisco, CA 94132
United States

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