Short-Term Rentals Have Modest Impact on Home Prices, Study Suggests -- Update

Date : 11/19/2019 @ 5:11PM
Source : Dow Jones News
Stock : Expedia Group Inc (EXPE)
Quote : 107.58  0.0 (0.00%) @ 12:52PM
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Short-Term Rentals Have Modest Impact on Home Prices, Study Suggests -- Update

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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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