New working paper with @john_morehouse7 and @Brett_Garcia_ on the impact of short-term rentals (Airbnb) on housing prices: http://www.keatonmiller.org/s/2020-12-11-str-heterogeneous.pdf

Prev. consensus in lit. is that Airbnb drives up house prices by giving home-owners a new option. 1/7

However, press and policymakers worry about negative externalities -- e.g. party houses.

If negative externalities are big enough, they might overcome the upward house price pressure created by rental revenues. Easy to show with with model of housing market. 2/7

We demonstrate this empirically. We separately estimate the impact of the marginal Airbnb listing on house prices for each of the 88 cities in LA county. Several estimates are negative. 3/7

One negative estimate is for Santa Monica, a wealthy oceanfront suburb with lots of tourism. In 2015, Santa Monica implemented a strict anti-Airbnb regulation, hoping to encourage housing affordability. 4/7

Using a diff-in-diff framework with the City of LA as a control, we show the policy did not decrease house prices and likely increased them. "Party-related" calls to Santa Monica police started going down as soon as implementation began. 5/7

Conclusion: party-houses likely affect home prices. Two Qs for policy makers considering STR restrictions:
1. Are people staying in STRs spending tourism dollars in your city? (prob. not for suburbs)
2. Do STRs bring new tourists in? (prob. not for saturated areas) 6/7

If answer to either is "no", then STR regulations may backfire (at least for keeping house prices down). More work to do in pinning this down, though. 7/7