DP13094 Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles

Author(s):	Hans R.A. Koster, Jos van Ommeren, Nicolas Volkhausen
Publication Date:	July 2018
Date Revised:	December 2019
Keyword(s):	externalities, House Prices, regulation, short-term rentals, supply effects
JEL(s):	R21, R31
Programme Areas:	Public Economics, International Trade and Regional Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=13094

Online short-term rental (STR) platforms such as \textit{Airbnb} have grown spectacularly. We study the effects of STR-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 of 15% within 5km of Hollywood's Walk of Fame).