Airbnb Is Associated with a Modest Increase in Boston Rents

The growth of the sharing economy has been a hot topic among economists in recent years. What does it mean for US housing markets? This study adds to the growing body of literature about the short-term effects of Airbnb’s growth on rental markets. Airbnb supporters favor the opportunity the company provides for residents to earn additional income, while critics say it leads to increased rents in large cities. The authors examine whether Airbnb’s increased presence in Boston raises asking rents and whether the change in rents could be driven by a decline in the supply of rental housing on the market. They combined weekly rental listings data with data on Airbnb listings and then used a fixed-effects model to control for unobserved variables, which allowed for a precise estimate of Airbnb’s impact on rents. The results support both sides of the debate on the nature and source of the housing listed for rent on Airbnb: most Airbnb hosts had only one listing, meaning they were simply seeking extra income, but hosts who had multiple properties listed accounted for nearly half of the Boston properties on Airbnb. The results support the conclusion that home sharing decreases the housing supply for long-term residents and increases nearby asking rents.

Key findings

• The authors found that a 1 standard deviation increase in Airbnb listings is associated with an increase in asking rents of 0.4 percent and a 5.9 percent decrease in the number of offered rental units. If Airbnb growth continues at its current rates, use will double in Boston in a little more than three years.
• On October 5, 2015, 82 percent of hosts in Boston only had one Airbnb listing. The 18 percent who had multiple listings accounted for 46 percent of the Boston listings.
• The authors posit that because home sharing is both a personal and commercial enterprise, it should be regulated and taxed accordingly.
• The results point to the need to further analyze the social welfare implications of home sharing, including whether Airbnb enables middle-income families to stay in their homes in rapidly growing housing markets.