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A common argument against Airbnb and similar home-sharing companies is that they raise rents, because every apartment used for short-term rentals could be used for long-term rentals. A recent paper by a Spanish Ph.D. candidate suggests otherwise. The paper focused on Santa Monica, California where, in 2015, the city adopted an ordinance restricting home-sharing. This city’s ordinance was successful in reducing Airbnb listings- especially listings of complete apartments, which cities are most likely to regulate (as opposed to spare rooms in a residence used by an Airbnb host). If the anti-home sharing argument was valid, rents should have gone down. Instead, rents rose in Santa Monica by the same amount as they rose in other Los Angeles suburbs that do not regulate home-sharing to the same extent.
A decade or two ago, a traveler who wished to stay in a city temporarily had no alternative to a hotel. Even if the owner of a house or condominium wished to rent out a room for a short period of time, the costs of advertising in a newspaper would have at least partially canceled out the financial benefits from renting. But the Internet has made home-sharing much more economical, through websites like Airbnb.com. At first glance, the home-sharing industry seems highly beneficial: guests get a cheaper and/or more exotic vacation, home-sharing hosts get extra money to pay off mortgages, and their neighborhoods benefit from tourist revenue. Nevertheless, NIMBYs have attacked home-sharing. One major argument is that home-sharing creates negative externalities. For example, a recent law review article(1) notes that some neighborhood activists in Silver Lake (a trendy Los Angeles neighborhood) sought to exclude home-sharing from their neighborhood on the ground that shared homes are “hotel-like room rentals” and such a “commercial use [causes] the noise and traffic levels of the area [to] increase as a result of people coming and going, and the transient nature of the establishment can increase the crime rate.” As a result of these problems, home-sharing “brings nuisances to residential areas, thereby lowering the value of all homes in the neighborhood.” In other words, the “externalities” argument rests on the following chain of logic: Assumption 1: Home-sharing, as a commercial use, is no different from hotels. Assumption 2: Commercial uses bring down property values. Conclusion: Home-sharing brings down property values. But none of these claims has significant factual support. First, home-sharing is somewhat different from a large hotel. An individual hotel might have hundreds or thousands of guests on one block. By contrast, home-shares tend to be spread out over a much larger space, […]
If you read elite commentary on the home-sharing industry (that is, Airbnb and its competitors), especially on the Left, you might think it is quite controversial. However, a recent Pew survey suggests otherwise. According to Pew, very few people know very much about home-sharing. Only 11 percent of Americans have used home-sharing services, and 53 percent of all adults have never even heard of them. Only 9 percent of Americans claim to have heard “a lot” about the homesharing debate, and 16 percent have heard “a little.” Among people who have actually used home-sharing services, these numbers rise to 19 percent and 37 percent. But to the extent Americans are aware of home-sharing, they like the idea. Only 4 percent of Americans think home-sharing should be illegal, and only 30 percent think it should be taxed. 52 percent think homesharing should be legal and untaxed. Even among self-described liberals, only 38 percent think homesharing should be taxed.