Airbnb and other home sharing platforms are contributing to the affordability crisis in Los Angeles—but only nominally. New research from UCLA Ziman Center for Real Estate analyzes the potential link between the affordability crisis and home sharing platforms, and found that a 10% increase in Airbnb listings equates to a .04% increase in rental rates. Home sharing also has an increase on home prices. When the stock of Airbnb rooms increases 10% it leads to a .73% increase in housing prices. In markets like Los Angeles, where the rental supply is already limited and a greater number of people participate in home sharing, the results are more dramatic, according to the report, although specific figures were mot published. To find out more about the research and the link between home sharing and affordability, we sat down with one of the report's authors, Edward Kung, an associate professor of economics at UCLA, for an exclusive interview.

GlobeSt.com: What was the impetus for this research on the relationship between Airbnb and affordability?

Edward Kung: There has been a lot of policy debate about how best to regulate Airbnb, and part of that is driven by concern over how home sharing might impact affordability for local residents. Not much empirical work had been done on this question, and we wanted to take a look at it.

GlobeSt.com: Your research show that Airbnb leads to an increase in both rent and home prices. How is Airbnb driving prices up through home sharing?

Kung: We argue that Airbnb drives up house prices and rents through two channels.  First, Airbnb causes some landlords to switch from supplying the long-term rental market to the short-term rental market.  Since the two markets are segmented, this drives up rents in the long-term market.  The increase in rent will also be capitalized into house prices.  However, we identify a second channel through which Airbnb can increase house prices even further, which is that it increases the ability for homeowners to generate income from excess housing capacity, like extra rooms or time away from home.

GlobeSt.com: Airbnb contributes to less than a half-percent increase in rents, but L.A. rents increased 7% last year. Aren't there other more crucial factors than home sharing contributing to the affordability crisis? How much pressure do home sharing services really put on the economy?

Kung: In our view, there are much more important factors driving the affordability crisis than Airbnb. Chief among them are lack of supply and stagnant incomes.  However, if the question is whether there is any evidence that Airbnb is driving up housing costs at all, the answer would be yes.

GlobeSt.com: Are there other economic benefits to home sharing that offset these costs?

Kung: Yes. Our results show that Airbnb increases the value of homeownership by increasing the ability for homeowners to generate income from their excess housing capacity. This is a pure economic efficiency that should not be discouraged through regulation. Airbnb may also have other beneficial effects that we do not measure, such as increasing the revenue to local businesses.  However, there may be additional unmeasured costs as well, such as noise, congestion, or safety concerns related to increased short-term residents.

GlobeSt.com: What is the regulatory and government response to home sharing, and what do you think the solution should be to this issue?

Kung: Different cities have responded differently.  Some cities, like Santa Monica, prohibit short-term rentals of less than 30 days.  Others may limit the total number of days a property may be rented out in the short-term market.  It's unclear to us how well these policies are enforced.  The regulatory frameworks are city-specific and constantly evolving, it seems.  In our view, home-sharing policy should at most seek to limit the conversion of long-term rentals to short-term rentals, but should not impact the ability of owner-occupiers to share the excess capacity of their primary residences.