Airbnb’s Alarming Aftermath: An Analysis of Airbnb’s Effect on San Francisco’s Rent and Housing Market

Abstract

Airbnb’s presence globally has affected housing markets negatively, and its growth has caused concerns about its effect on the housing crisis and rising rent and house prices because of how it takes rent and housing supply away from long-term residents. In San Francisco specifically, the city has been unsustainably adding more jobs than housing units, further exacerbating the supply-demand impact for increasing rent and house prices. This paper determines whether Airbnb’s increased presence in the San Francisco Bay Area has caused an overall significant effect of rising rent and house prices along with the immediate effect of San Francisco’s Ordinance 218-14, which legalized Airbnb short-term rentals. Furthermore, this paper also explores the idea of possible regulation by limiting Airbnb listings to a specific type, separating the total Airbnb density into two categories of entire density (entire apartments and homes) and private density (private and shared rooms), and determines whether this ordinance’s impact unintentionally spread beyond San Francisco when it was not supposed to. Overall, I found that Airbnb presence is correlated with an increase in rent and house prices in the San Francisco Bay Area except for house prices by city, with San Francisco’s Ordinance 218-14 leading to a larger and statistically significant short-term increase in rent and house prices through Airbnb density. Furthermore, I found some evidence that limiting Airbnb listings to private and shared rooms can reduce Airbnb’s impact on rent and house prices in the short and long term and that the San Francisco ordinance did spread to the Bay Area, informing policymakers to be wary of their regulation effects and enforcing them strictly in collaboration with the affected companies to prevent unintentional spillover effects to surrounding areas.