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Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles

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  • Koster, Hans R.A.
  • van Ommeren, Jos
  • Volkhausen, Nicolas

Abstract

Online short-term rental (STR) platforms such as Airbnb have grown spectacularly. We study the effects of regulation of these platforms on the housing market using a quasi-experimental research design. 18 out of 88 cities in Los Angeles County have severely restricted short-term rentals by adopting Home Sharing Ordinances. We apply a panel regression-discontinuity design around the cities’ borders. Ordinances reduced listings by 50% and housing prices by 2%. Additional difference-in-differences estimates show that ordinances reduced rents also by 2%. These estimates imply large effects of Airbnb on property values in areas attractive to tourists (e.g. an increase in house prices of 15% within 2.5km of Hollywood’s Walk of Fame).

Suggested Citation

  • Koster, Hans R.A. & van Ommeren, Jos & Volkhausen, Nicolas, 2021. "Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles," Journal of Urban Economics, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:juecon:v:124:y:2021:i:c:s0094119021000383
    DOI: 10.1016/j.jue.2021.103356
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    More about this item

    Keywords

    Short-term rentals; Souse prices; Regulation; Supply effects; Externalities;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development

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