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 2018
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 housing rental platforms such as Airbnb have grown spectacularly in recent years. 18 out 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 residential property prices by 3%. Difference-in-difference estimates show that rents also decreased by 3%. These estimates imply large effects of Airbnb on property values in areas attractive to tourists (e.g. by 14% within 5km of Downtown LA).