In today’s U.S. housing market there is a clear crisis happening. This has caused cities all around the country to experience a drastic increase in the housing market. For example, Utah has seen one of the largest increases in price over the last year. Some areas like Summit County, and Sevier County have seen a 48% increase in a year. Boise has seen a 45% increase in home value with 53% of homes reported to be bought well over the asking price over the same period. Some other cities to note are Austin, TX, Phoenix, AZ, Detroit, MI, and Las Vegas, NV, which all are seeing above 40% over the expected premium.
Throughout the country and many cities throughout the west are experiencing very high increases in housing prices. Several factors should be considered when discussing why the housing market is up so much. Many people attribute Airbnb and the popularity of house sharing to the increase in housing market prices. Studies show that the effects of Airbnb may not be as much as you would expect.
What effect does Airbnb have on the Housing Market?
According to a private U.S.-based study, a 1% increase in Airbnb rentals attributes a 0.018% increase in rent and a 0.026% increase in house price. To control this environment, they do not factor in additional supply being added to the housing market.
I wanted to see if I could see these numbers translated to data taken from AirDNA on the number of active listings on Airbnb and Vrbo. With the formula, I have stated above and the fact that these two platforms are the industry leaders a change in the number of listings on these platforms should represent the overall change in the market.
Vacation Rental Market changes
All of the cities I have chosen used for this section of my article are in the top 10 for the highest increase in housing value and rent in the country. I figured by using these cities we would be able to see what the vacation rental market is doing in some hottest housing markets in the country. This I feel will be able to tell us if Airbnb is the cause for the house of crisis as these markets should have all experienced a drastic increase in listings.
I used the number of listings in Q1 of 2020 which ended on March 31st, 2020 to Q3 2021 which ended on September 30th, 2021. This is the most accurate timeline to be able to evaluate, as the housing crisis began after the U.S. began to enforce lockdowns due to Covid-19 Pandemic.
In Boise, Idaho in Q1 2020 there were 1231 rentals and in Q3 2021 there are 1251 rentals which is a 1.8% increase.
In Park City, Utah in Q1 2020, there were 6172 rentals and in Q3 2021, there are 5518 rentals which is a 10.5% decrease
In Austin, Texas in Q1 2020, there were 10,840 rentals and in Q3 2021, there are 9004 rentals which is a 16.9% decrease
Bottom Line
Bottom LineI began my research after hearing many close friends and family members blame the current housing market crisis on Airbnb and the vacation rental industry. As the statistics I’ve provided in this article have proven, that belief is completely false. Purchases from Investors in the Vacation Rental industry make up less than 1% of all real estate transactions, and with all the evidence to hold my ground, I am now convinced that Airbnb has had virtually no effect on the current housing market “crisis”.
