The impact of short-term rental activity on house prices: evidence from coastal Virginia

Abstract Short-term rentals such as Airbnb have grown substantially in recent years. In this study, we investigated the effect of Airbnb rentals on neighboring house prices in Hampton Roads, Virginia. We focus on three different measures of Airbnb activity to obtain more robust results. Our measures include active Airbnb listings, active listings with at least one reservation, and the sum of reservations over three different periods. Consistent with previous literature, our main results show that prior Airbnb rental activity has a positive impact on the surrounding housing sales prices. Furthermore, the localized impact diminishes over geographic space (i.e., distances greater than 500 m). We also examine how Airbnb rental activity impacts house prices across the price distribution of home sales, using quantile regression. We find that the effect is strongest for higher-priced homes, while lower-priced houses are less impacted by Airbnb rentals.