The Battle for Homes: How Does Home Sharing Disrupt Local Residential Markets?
52 Pages Posted: 20 Oct 2018 Last revised: 21 Jul 2019
Date Written: June 2019
As cities debate regulations of Airbnb and other home-sharing services, we study the impacts of home sharing on local residential real estate markets. By leveraging a unique quasi-experiment on Airbnb—a platform policy that caps the number of properties a host can manage in a city, we present the first empirical evidence on the mechanism behind the disruption of home sharing on local residential markets. We first find that rents in the long-term rental market and home values in the for-sale housing market dropped after the platform policy and that the price-to-rent ratio stayed relatively constant over time. The reduction in rents and home values is attributed to excess supply in local residential markets driven by the platform policy. We further discuss the generalizability of our findings by estimating and comparing the intensity of the policy impact across cities. Lastly, we reveal that the policy had heterogeneous impacts on local residential markets by residential property types and by market characteristics (e.g., the fraction of rental housing). Our findings provide important implications for policy makers and stakeholders of home sharing platforms.
Keywords: Home sharing, Residential markets, Airbnb, Platform economics, Affordable housing, Difference-in-differences, Synthetic control
Suggested Citation: Suggested Citation