The Effect of Home-Sharing on House Prices and Rents: Evidence from Airbnb

72 Pages Posted: 25 Jul 2017 Last revised: 5 Mar 2020

See all articles by Kyle Barron

Kyle Barron

National Bureau of Economic Research

Edward Kung

California State University, Northridge - David Nazarian College of Business and Economics

Davide Proserpio

Marshall School of Business, University of Southern California

Date Written: March 4, 2020

Abstract

We assess the impact of home-sharing on residential house prices and rents. Using a dataset of Airbnb listings from the entire United States and an instrumental variables estimation strategy, we show that Airbnb has a positive impact on house prices and rents. This effect is stronger in zipcodes with a lower share of owner-occupiers, consistent with non-owner-occupiers being more likely to reallocate their homes from the long- to the short-term rental market. At the median owner-occupancy rate zipcode, we find that a 1% increase in Airbnb listings leads to a 0.018% increase in rents and a 0.026% increase in house prices. Considering the median annual Airbnb growth in each zipcode, these results translate to an annual increase of $9 in monthly rent and $1,800 in house prices for the median zipcode in our data, which accounts for about one fifth of actual rent growth and about one seventh of actual price growth. Finally, we formally test whether the Airbnb effect is due to the reallocation of the housing supply. Consistent with this hypothesis, we find that, while the total supply of housing is not affected by the entry of Airbnb, Airbnb listings increase the supply of short-term rental units and decrease the supply of long-term rental units.

Keywords: Sharing Economy, Peer-To-Peer Markets, Housing Markets, Airbnb

JEL Classification: R31, L86

Suggested Citation

Barron, Kyle and Kung, Edward and Proserpio, Davide, The Effect of Home-Sharing on House Prices and Rents: Evidence from Airbnb (March 4, 2020). Available at SSRN: https://ssrn.com/abstract=3006832 or http://dx.doi.org/10.2139/ssrn.3006832

Kyle Barron

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Edward Kung (Contact Author)

California State University, Northridge - David Nazarian College of Business and Economics ( email )

Northridge, CA 91330
United States

Davide Proserpio

Marshall School of Business, University of Southern California ( email )

701 Exposition Blvd
Los Angeles, CA Los Angeles 90089
United States

HOME PAGE: http://faculty.marshall.usc.edu/Davide-Proserpio/

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