The Battle for Homes: Is Home Sharing Disrupting Rental or Housing Markets?

Posted: 20 Oct 2018

See all articles by Wei Chen

Wei Chen

University of Arizona - Eller College of Management

Zaiyan Wei

Purdue University - Krannert School of Management

Karen Xie

University of Denver, Daniels College of Business

Date Written: September 1, 2018

Abstract

We study the impact of home sharing on local rental and housing markets. Using a unique dataset from Airbnb, we leverage a quasi-experiment — a platform policy that caps the number of properties a host can manage in a city — to estimate the impact. We find that the policy was associated with a 2.6% decrease in local rents and a 0.3% decrease in home value. In addition, the price-to-rent ratio, defined as the home value divided by annual rent, increased by about 2.3%. This implies that home sharing has a greater impact on local rental markets than housing markets. In addition to the policy evaluation, further evidence shows that a 1% increase in Airbnb properties leads to a larger increase in rents than the home value in local markets. Our findings speak to the questions of whether and how home sharing affects affordable housing.

Keywords: Home sharing, Housing markets, Airbnb, Affordable housing, Synthetic control

Suggested Citation

Chen, Wei and Wei, Zaiyan and Xie, Karen, The Battle for Homes: Is Home Sharing Disrupting Rental or Housing Markets? (September 1, 2018). Available at SSRN: https://ssrn.com/abstract=3257521

Wei Chen

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Zaiyan Wei (Contact Author)

Purdue University - Krannert School of Management ( email )

100 Grant St
West Lafayette, IN 47907-2076
United States
(765) 494-5958 (Phone)

Karen Xie

University of Denver, Daniels College of Business ( email )

2101 S. University Blvd.
Denver, CO 80208
United States

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