How Are Airbnbs Impacting the Housing Market?
How Are Airbnbs Impacting the Housing Market?
Throughout the pandemic, we’ve heard countless stories about real estate bidding wars, buyers waving inspections, and plenty of other out-of-the-norm trends and behaviors. For plenty of reasons, homes were hard to find, and when there’s a high demand and a low supply, prices naturally increase. If you’ve been trying to purchase that just-right home but keep getting outbid, you might start to wonder if there is something else behind this phenomenon––is it really just a supply and demand issue?
The answer is often “yes,” but the cause might not be what you initially thought.
Airbnb, Supply and Demand
Lots of folks have had a hunch that when Airbnb owners swoop in and buy up property in any given neighborhood, real estate prices and rental costs go up, while simultaneously displacing the people that could have lived in these short-term rental properties. While there are multiple sides to this coin, and plenty of opinions to go around, data bears out the facts.
Predictions indicate that in 2022 Airbnb will likely increase inventory by 25%, with many units coming from residential real estate. Beyond taking rentals and homes off of the real estate market, it’s also being predicted that this will drive up prices. To get an idea of what that might mean, we can look at some stats from a recent study:
- In the 100 zip codes included in the study, a 10% increase in Airbnb rentals led to a 0.42% increase in rent prices and a 0.76% increase in home prices
- Overall, rents increased 2.2% and real estate property prices by 4.8%
- Studied areas are seeing annual average increases of $9 in monthly rent and $1,800 in home prices
Clearly, Airbnb short-term rentals are having an effect. This study looked at communities that have the highest number of Airbnb listings, but as the service seems to be growing, it’s safe to extrapolate that data to mean that with growth on Airbnb’s side can come increased prices and lower availability in the local real estate market. This is still a general prediction and not many formal studies have been done, but people are seeing this anecdotally, on the ground.
A somewhat comforting fact that emerged from the aforementioned study is that Airbnb rentals that belong to owner-occupiers––individuals who live on the premises––tend to have significantly less of an effect on rent prices than those belonging to so-called “absentee landlords.”
The Other Side of the Coin
While on one side folks are clamoring for fewer Airbnb rentals and more affordable housing options, many owners of these short-term rental properties tell a different story. Plenty of individuals who were hit hard by the pandemic or other factors find that the only way they can keep their business or family afloat is by utilizing Airbnb and renting part of their property. Airbnb confirms this, saying that an internal study found that 60% of hosts need this income to stay in their homes. People in this position say that Airbnb is being used as a scapegoat and that the real issue is far larger than any one company and needs to be addressed in the policy arena.
Another argument from Airbnb hosts in cities where the service is being eradicated is that they often cannot outright afford the luxury homes they rent out without this income. These are luxury homes in resort areas, the sort of place you’d want to retire or spend time later in life. And the only way for many hosts to realize that dream is through the income made from short-term rentals.
There are a lot of moving parts here, and a lot at stake too. All we can say for sure is that we need more data. But in the meantime, there are a lot of intense feelings on both sides, and for different reasons.
During Turbulent Times, Rely on an Expert
If you’re looking to buy during this current housing market, you could begin to feel like the bottom is slowly dropping out. Will Davis of Ohio Probate and Luxe Realtor has experience with the rises and falls of the Cleveland housing market, and he can help you through whatever comes. Get in touch for expert advice on finding the right Cleveland property for you.