Short-Term Rentals Have Modest Impact on Home Prices, Study Suggests -- Update
November 19 2019 - 12:11PM
Dow Jones News
By Will Parker
Short-term vacation rentals haven't significantly contributed to
the rise in American housing costs, according to a nationwide study
by Oxford Economics that was commissioned by booking website
Expedia Group Inc.
In the first such study to cover every U.S. county where data
was available, the report found that over a four-year period only
0.2 percentage point of the 4.3% rise in inflation-adjusted rent
could be attributed to the effects of short-term rentals. For home
sales, the increase amounts to less than $9 on the average monthly
mortgage payment.
Expedia is the owner of short-term vacation rental platform
Vrbo, one of the larger short-term brands in a growing field that
includes Airbnb, Sonder and others. Oxford Economics is an Oxford,
U.K.-based forecasting and quantitative analysis firm that said it
compiled a data set with more than 70 variables for the study.
Short-term rental companies have come under intense scrutiny
from local governments across the country. Housing advocates and
other critics have argued that short-term listings reduce housing
supply when investors buy up apartment units or homes and rent them
out to tourists on short-term rental sites.
Some local officials recently have taken these complaints
seriously and enacted new protections. Jersey City, N.J., recently
decided to restrict short-term rentals by requiring units to be
owner-occupied. The city of Austin, Texas, said in July it plans to
crack down on listings after a report it commissioned found that
75% of short-term rentals in Austin were illegally operated.
Previous research of the industry has come to a different
conclusion than Oxford Economics, finding that limiting short-term
rentals would relieve pressure on home prices.
In Los Angeles County, where more than a dozen municipalities
introduced short-term rental ordinances in recent years, a study by
three economics researchers at the University of Amsterdam
estimated that a 50% reduction in short-term rental listings
brought down home prices and rents in the affected areas by 2%.
A 2017 study by University of California, Los Angeles economics
professor Edward Kung found a three times greater impact on rent
than the Expedia report found, but it looked at ZIP Codes in the
country's 100 largest metropolitan areas, and not every county in
the country.
"Using larger geographies as the unit of analysis may mask the
impact of STR growth in particularly impacted neighborhoods," Mr.
Kung said of the Expedia report.
Expedia said that local governments should consider the
nationwide averages and not just reports that highlight select
cities and neighborhoods.
"I think it's important to have a comprehensive view to help
these cities understand it," said Philip Minardi, Expedia's
director of policy communications.
Write to Will Parker at will.parker@wsj.com
(END) Dow Jones Newswires
November 19, 2019 11:56 ET (16:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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