Market Shifts in the Sharing Economy: The Impact of Airbnb on Housing Rentals
43 Pages Posted: 13 Aug 2019
Date Written: August 9, 2019
This paper examines the impact of Airbnb on the local rental housing market. Airbnb provides landlords an alternative opportunity to rent to short-term tourists, potentially causing some property owners to switch away from long-term rental to local residents, thereby affecting the rental housing supply and affordability. Despite recent government regulations to address this concern, it remains unclear whether and what type of properties are switching.
Combining Airbnb listings data and American Housing Survey data, we estimate a structural model of property owners' decisions and conduct counterfactual analysis to generate policy implications. We find that Airbnb mildly cannibalizes the long-term rental supply. The reduction in rental supply is larger in metro areas where Airbnb is more popular, but the market expansion effect is also larger in these areas. Cannibalization is concentrated among lower priced, affordable units rather than among higher priced, luxurious ones, potentially causing concerns regarding housing affordability. The counterfactual results suggest that policies such as imposing a limit on the number of months a property can be listed outperform imposing a tax in terms of reducing the cannibalization effect while maintaining the market expansion effect. Finally, rent regulations on long-term rentals must be implemented with greater caution, as Airbnb can exacerbate the negative impacts of rent control.
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