Short-Term Rentals and Residential Rents: Evidence From a Regulation in Santa Monica

Effect of regulation on Airbnb listings (left) and rents (right).

Abstract

In recent years, there has been a significant increase in short-term rentals (STRs) facilitated by digital platforms such as Airbnb. This study evaluates the impacts of regulations imposed on these platforms, focusing on the Home-Sharing Ordinance implemented in Santa Monica, California. Using a Synthetic Control Method, the analysis finds that, two years after its implementation, the ordinance caused the number of Airbnb entire home listings to decrease by 60%. However, the study found no evidence that this regulation influenced long-term rental prices. Finally, suggestive evidence indicates that the ordinance did not increase the supply of houses allocated for long-term renters, potentially explaining its lack of impact on rents.

Publication
Short-Term Rentals and Residential Rents: Evidence From a Regulation in Santa Monica
Cayruã Chaves
Cayruã Chaves
Visiting Professor of Economics

Visiting Professor of Economics at UIB.