Is home sharing driving up rents? Evidence from Airbnb in Boston

Abstract

The growth of the sharing economy has received increasing attention from economists. Some researchers have examined how these new business models shape market mechanisms and, in the case of home sharing, economists have examined how the sharing economy affects the hotel industry. There is currently limited evidence on whether home sharing affects the housing market, despite the obvious overlap between these two markets. As a result, policy makers grappling with the effects of the rapid growth of home sharing have inadequate information on which to make reasoned policy decisions. In this paper, we add to the small but growing body of knowledge on how the sharing economy is shaping the housing market by focusing on the short-term effects of the growth of Airbnb in Boston neighborhoods on the rental market, relying on individual rental listings. We examine whether the increasing presence of Airbnb raises asking rents and whether the change in rents may be driven by a decline in the supply of housing offered for rent. We show that a one standard deviation increase in Airbnb listings is associated with an increase in asking rents of 0.4%.