A new study explores short term rentals’ effect on the housing market.
That AirBnB you found in DuPont Circle for the weekend is cute. But is it making Washington, D.C. more expensive for the people who actually live there?
A new study, penned by Zhenpeng Zou of the University of Maryland College Park, shows that the density of short-term rentals (STRs) like AirBnB in D.C. does have an effect on housing cost. Zou’s study used a method called hedonic regression, which breaks down the value of a good—in this case, a house in Washington—into the effects of its various qualities on its value.
To do this, Zou looked at home values before November 2016 and after January 2017. The days surrounding the inauguration of President Trump saw a massive influx of out-of-towners to attend both the event itself and the much larger Women’s March that followed. This wave of people needed places to stay, and AirBnB owners saw dollar signs.
The study found that AirBnB accounted for a 5% increase in home values in popular tourist neighborhoods like downtown and Adams Morgan. Possibly more alarming is the finding that AirBnBs were related to a 3% increase in home values in historically Black and Latino neighborhoods like Shaw and Columbia Heights.
Zou’s study suggests that AirBnBs could hurt affordability not by restricting the supply of rental units, but by inflating home values and pricing people out.
The District’s council passed an ordinance to regulate STRs later in 2017. Localities around D.C. like Arlington implemented legislation governing STRs shortly after. Virginia Beach followed suit in 2019. Now, the City of Richmond is considering a similar regulation.
There could be a silver lining, though. Zou suggests that the crowd-sourced technology of STR platforms could be used in the future to match Section 8 voucher-holders with landlords. Could an app on your phone be a key to deconcentrating poverty?
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