In recent years, real estate websites, such as Airbnb and HomeAway, have affected the real estate market nationwide because the supply of short-term rentals has increased eight times since 2011. As a result, Airbnb and similar short-term rentals (STR) have become highly popular investments that look to continue for the foreseeable future.
However, there has been considerable debate in many cities about the impact of short-term rentals on the availability and prices of real estate. Many say an ‘Airbnb effect’ hits many communities as hosts term their properties into STRs, which removes housing stock from the local markets.
An article in the Harvard Law & Policy Review states that the short-term rental market affects the availability of affordable homes. The thinking goes that a short-term rental is effectively removed from the long-term rental market and is part of the area’s hotel room supply. This leads to higher rent and real estate prices, which may affect how much home people can afford to buy. If you are interested in purchasing real estate, our Illinois real estate attorneys at Covert Marrero Covert LLP can help.
Other Studies Show Short-Term Rentals Affect Rents And Real Estate Prices
A 2016 study by the University of Massachusetts determined that home sharing in Boston led to higher rents. This happened because they decreased the number of available homes and apartments to residents.
In addition, a study in New York City by the Comptroller’s Office found that the increased availability of short-term rentals cost city residents $600 million in higher rent in 2016 because of less long-term housing availability. Reduced housing stock availability also increases purchasers’ real estate prices.
Another study in Wisconsin determined that doubling rentals by Airbnb in a neighborhood in the state increased real estate prices by at least 10%. According to the report, this tends to happen most in rural areas, while urban areas see fewer effects.
Nashville Banned Some Short-Term Rentals In 2019
The effects of short-term rentals on home rents and prices in Nashville came to a head in 2019 when Nashville Metro Council set an end date for new STR permits in residential neighborhoods. The Council cited severe concerns about the effects on home prices, the availability of affordable homes, and life quality. In addition, many homeowners argued at the time that they did not buy a home in the area with the idea they would have a small hotel next to their residence.
The ban on additional permits in the Nashville area began on Jan. 1, 2022. The Council also stated during legislative debates that the increase in STR in the Nashville metro area had lowered housing stock and increased prices.
Contact Our Illinois Real Estate Attorneys Today
Many believe that renters and home buyers across the US are paying higher rents and prices because of STRs. However, short-term rentals are often a profitable real estate strategy for investors and should be considered part of your portfolio. If you want to buy or sell short-term rentals in Illinois, you should work with an experienced real estate agent and attorney to ensure every transaction goes well. Our Illinois real estate attorneys at Covert Marrero Covert LLP can help, so call (630) 717-2783.
