Vacation Rentals Boost Long-Term Home Construction, New Study Finds
A major new study has found that vacation rental homes drive long-term new housing development in cities that don’t have strict vacation rental regulations.
The study found that cities that restrict the development of vacation rental properties block development, while those with growing vacation rental markets see the development of new and improved housing grow faster.
The study, conducted by a team of researchers led by Ron Bekkerman, CTO of the AI-powered real estate data integration platform Cherre inc., also suggested that reduced regulation of vacation rental homes – called short-term rentals or STRs in the study – can be used to foster housing growth in struggling communities.
The results of the study were published Wednesday in Harvard business review, in an article titled âResearch: Restricting Airbnb Rentals Reduces Developmentâ.
The results were quickly praised by Florida vacation rental property owners.
âWe’ve seen whole neighborhoods transformed into run down areas of St. Augustine, Daytona, Tampa, Jacksonville, and so on. by risk-taking STR investors. This is something we have been saying for years, âsaid Denis hanks, Executive Director of the Florida Alliance for Vacation Rentals, which has 1,400 members.
âIt also explains how fair regulations play into the STR market and the growth of the local community in the long term. STRs can be used as a tool to encourage local real estate development and economic growth, âHanks added.
The study’s authors warn that this defines a silver lining.
A previous 2019 study by two of the authors (Cal State-Northridge professor of economics Edward Kung and professor of marketing at the University of Southern California Davide Proserpio) looked the wrong way. The 2019 study, discussed in the new Harvard Review article, found that vacation rental homes can, in the short term, drive up rental and housing prices and reduce affordable housing in a community, by taking stock of the traditional market to do so. available only to vacationers.
This had led researchers to ask themselves this question: Could the immediate damage of services like Airbnb to the local economy be offset or even offset by the long-term increase in demand they create?
For the new study, researchers said they looked at 2.9 million residence permit applications, 750,000 Airbnb listings and 4 million residential sales transactions in 15 major metropolitan cities nationwide. They also took a closer look at cities in Los Angeles County.
Among the discoveries:
– On average, a 1% increase in Airbnb listings resulted in a 0.769% increase in permit applications. The authors said this suggests âAirbnb can play a major role in supporting local real estate markets and thereby strengthening local tax bases. Given these findings, it follows that restriction of STRs may have a significant negative impact on local economic activity. “
– In Los Angeles County, neighborhoods in cities that did not have vacation rental regulations experienced 9% more housing permit growth than adjacent cities that had significant vacation rental regulations. vacation. There was also a lot more activity on permits for accessory housing units – the so-called mother-in-law’s apartments.
– The authors concluded that cities that have significant vacation home regulations experienced a relative decrease of the 15 cities studied, STR restrictions reduced property values ââby a total of $ 2.8 billion, and cost $ 40 million per year in tax revenue compared to cities that did not have significant regulations.
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