The Sharing Economy and Housing Affordability: Evidence from Airbnb

42 Pages Posted: 25 Jul 2017  

Kyle Barron

University of California, Los Angeles (UCLA) - Department of Economics

Edward Kung

University of California, Los Angeles (UCLA)

Davide Proserpio

Marshall School of Business, University of Southern California

Date Written: July 21, 2017

Abstract

We assess the impact of home-sharing on residential house prices and rental rates. Using a comprehensive dataset on Airbnb listings from the whole United States, we regress zipcode level house prices and rental rates on the number of Airbnb listings, controlling for endogeneity using a shift-share instrumental variable strategy. We find that a 10% increase in Airbnb listings leads to a 0.39% increase in rents and a 0.64% increase in house prices. Moreover, we find that the effect of Airbnb is smaller in zipcodes with a larger share of owner-occupiers, suggesting that it is the absentee landlords who are on the margin of substituting their homes away from the rental market and into Airbnb. We present a simple model that rationalizes these findings.

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 Sharing Economy and Housing Affordability: Evidence from Airbnb (July 21, 2017). Available at SSRN: https://ssrn.com/abstract=3006832

Kyle Barron

University of California, Los Angeles (UCLA) - Department of Economics ( email )

8283 Bunche Hall
Los Angeles, CA 90095-1477
United States

Edward Kung (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
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://www-bcf.usc.edu/~proserpi/

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