Economists are divided on Airbnb's impact on housing crisis

Economists are divided on how much of an impact Airbnb and other short-term rental companies are really having on America’s housing affordability crisis. 

The problem is complex. Americans are facing high prices renting and buying homes, elevated mortgage rates and a startling undersupply of homes.

Some critics of short-term rentals argue they bear partial blame for rent increases and houses should be protected as single-family homes, not vacation stopovers. 

But the reality is far more nuanced. In some cities, like Irvine, California, short-term rental restrictions have led to positive outcomes. But in other cities, like Telluride, Colorado, restrictions have backfired. 

[Related: A new report offers tips for government officials to crack down on short-term rentals that go undetected. (link)] 

Michael Seiler, a finance and real estate professor at the College of William & Mary in Virginia, told CNN that whether short-term rentals help or hurt a local economy depends on a range of factors, including geographic location, housing market dynamics and relative appeal to tourists. 

“Real estate is local, and therefore, we should be having more localized conversations. Airbnb affects certain markets more than others,” Seiler said. “Everything that someone says is bad about Airbnb, I can tell you there’s a corresponding group who feels it’s good.”

The short-term rental market in the U.S. reached $64 billion in 2023, according to AirDNA, a data and analytics company focused on the short-term rental industry. The firm estimates there are 2.4 million vacation rental listings in the country. Experts estimate at least 2 million more homes need to be built to revive the U.S. housing market, but many short-term rentals are a host’s primary residence or vacation home. 

“Every housing unit that’s on Airbnb isn’t necessarily going back on the long-term rental market,” Airbnb’s Vice President of Public Policy, Theo Yedinsky, told CNN in an interview. 

Below, please find Property Guard's weekly short term rental regulation round-up, highlighting state and local news regarding short term rental regulations to regulate (or prohibit) Airbnbs and other STRs. If you want a comprehensive data solution on STR regulations in all 20,000 state and local jurisdictions, contact us here.

New and Proposed Regulations:

• Kentucky: The short-term rental industry is pushing legislators to pass legislation that scales down local governments’ ability to regulate Airbnb and VRBO. (link) And in Prairie Village, city council members voted to ban short-term rentals altogether. (link)
• Rhode Island: A Democratic lawmaker wants to create a statewide framework for cities to follow to help regulate short-term rentals. (link) 
• Muskegon, Minnesota: City officials passed a short-term rental ordinance capping how many vacation rentals can exist in the city. (link) 
• Columbia, Tennessee: City officials hear public feedback and are now working on recommendations for short-term rentals. (link) 
  

Other Noteworthy News:

• Buddy system: Airbnb’s latest update includes a “Co-Host Network” that allows property owners to team up with experienced local hosts who can help manage a listing. (link) 
• Housing for survivors: A pilot program in an undisclosed area of England is providing empty Airbnbs as safe housing to domestic abuse survivors. (link) 
• Ban aftermath: Several major cities around the world have banned Airbnb and seen their tourism landscape change. (link)