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The Sharing Economy and Housing Affordability: Evidence from Airbnb

40 Pages Posted: 25 Jul 2017 Last revised: 6 Oct 2017

Kyle Barron

National Bureau of Economic Research

Edward Kung

University of California, Los Angeles (UCLA)

Davide Proserpio

Marshall School of Business, University of Southern California

Date Written: October 5, 2017

Abstract

We assess the impact of home-sharing on residential house prices and rental rates. Using a comprehensive dataset comprised of Airbnb listings from the entire United States, we regress zipcode level house prices and rental rates on the number of Airbnb listings, using fixed effects to control for permanent differences across zipcodes as well as arbitrary CBSA level time trends, and using an instrumental variable based on Google search interest for Airbnb to control for any remaining endogeneity. We find that a 10% increase in Airbnb listings leads to a 0.42% increase in rents and a 0.76% increase in house prices. Moreover, we find that the effect of Airbnb is smaller in zipcodes with a larger share of owner-occupiers, a result consistent with absentee landlords taking their homes away from the long-term rental market and listing them on 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 (October 5, 2017). Available at SSRN: https://ssrn.com/abstract=3006832

Kyle Barron

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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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