{"id":162839,"date":"2023-11-29T13:29:40","date_gmt":"2023-11-29T20:29:40","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=162839"},"modified":"2023-11-29T13:29:43","modified_gmt":"2023-11-29T20:29:43","slug":"new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices","title":{"rendered":"New Evidence Shows That Banning Airbnbs Reduces Rent Prices\u2014What Does That Mean For Investors?"},"content":{"rendered":"\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/crackdown-on-short-term-rentals-get-tougher\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Strict Airbnb regulations and even bans<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;have been popping up left and right. New York City instituted what amounts to one just months ago. Honolulu instituted a 90-day-or-more rule last year. And in places like Dallas, short-term rentals have been banned almost entirely.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While that\u2019s not ideal if you\u2019re heavy in the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/the-ultimate-guide-to-short-term-rental-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;(STR) game, a new study shows it\u2019s not great for&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/are-rental-properties-a-good-investment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">long-term rental owners<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;either. In fact, for markets with a heavy short-term rental property presence, a ban on short-term rentals can have a significant impact on long-term rents in the area.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Are you invested somewhere with a big Airbnb presence and a potential ban on the horizon? Just planning where you might invest in your next rental property? Here\u2019s what the study tells us.<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_65679ed64be2e: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_65679ed64be2e\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Long-Term Rents Take a Hit From STR Bans<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The study, which was recently published in&nbsp;<\/span><em><span data-preserver-spaces=\"true\">Real Estate Economics<\/span><\/em><span data-preserver-spaces=\"true\">, looks at the after-effects of the ban on short-term rentals in Irvine, California. In 2018, the city put regulations in place that prohibited rentals of 30 days or less in any residential area.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Irvine enforced it, too, even hiring outside contractors to help root out violators, and by January 2021, the number of short-term rental listings in the city had been cut in half.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Many of those former STRs were then turned into long-term rentals. This pushed up supply and, according to the study, reduced rents by about 3% citywide in just two years.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The decrease isn\u2019t huge, especially considering Irvine\u2019s&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.zumper.com\/rent-research\/irvine-ca\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">average rent is about $3,000<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;for a one-bedroom property. But it does speak to the risk investors take when buying in areas with a large STR presence.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Michael J. Seiler, a professor at the College of William &amp; Mary and one of the study\u2019s authors,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/news.wm.edu\/2023\/06\/29\/where-should-the-welcome-mat-be-rolled-out-for-airbnb\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">said<\/span><\/a><span data-preserver-spaces=\"true\">:<\/span><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">\u201cRental policy can absolutely ruin your financial plan. That\u2019s the only reason you bought this house\u2014as an investment, and you never planned on living there. And now this investment\u2019s revenue just went out the window. I can tell you this from a nerd who builds financial models, it can become really uncertain in terms of how much is this really going to pay off. Is it going to be hugely profitable or hugely unprofitable? And that one decision alone\u2014whether short-term rentals are allowed\u2014can flip that number big time.\u201d<\/span><\/em><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to the study, properties that have similar property characteristics to area short-term rentals are also at higher risk of rent declines.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Know the Lay of the Land<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Understanding the STR landscape is important before investing anywhere\u2014whether in long-term or short-term rentals. As Seiler explains, a sudden ban can make a big difference in the rents you\u2019re able to command on a long-term property. But if you invest in an STR and are forced to convert it quickly into a longer-term rental? That can throw off your finances, too.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cYes, you can pivot and convert to a long-term rental, but you didn\u2019t run the numbers on that,\u201d Seiler said. \u201cYou better&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-q3-1\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">run the numbers<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;both ways and then try to assign a probability that you just might not be able to do short-term, even if you can right now.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The problem investors may run into is that more cities facing fast-growing rent prices will likely use STR bans as a strategy, putting several businesses at risk and cutting into future cash flow for long-term rental investors.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s important, more now than ever, to get a good sense of a market and its relationship with STRs before investing.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_966f096e4377dd1c0e3dac5905da1446\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_a1260395e4006c0b034abcad0e06dc68\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_c0407e8e0a311070e8691de4504969bb class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/new-evidence-suggets-that-banning-airbnbs-reduces-rent-prices&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Airbnb has faced a lot of criticism as of late, with many cities going as far as banning them. New findings show that the long-term effect is just as impactful to investors.<\/p>\n","protected":false},"author":613679,"featured_media":162841,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7382,7271],"tags":[],"class_list":["post-162839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-rental-prices","category-short-term-rentals"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=162839"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162839\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/162841"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=162839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=162839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=162839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}