Short-term rentals, such as those through Airbnb or HomeAway, have an insignificant impact on housing affordability—in fact, approximately 40 percent of respondents in the latest Zillow® Home Price Expectations (ZHPE) Survey said short-term rentals are “not meaningful” when it comes to home price and rent movement.
“Cities across the country are grappling with housing affordability issues, especially in places with rapidly rising rents and home values,” says Zillow Chief Economist Svenja Gudell. “In some hot West Coast markets, it’s not uncommon for renters to spend 40 percent or more of their income on a monthly rental payment, when historically that number was much lower. Inventory plays a large role in this affordability crisis; there simply aren’t enough rentals on the market to keep prices low. Clearly experts aren’t convinced that short-term rentals are the cause of our problem.”
Respondents to the survey expect home price appreciation to reach 5 percent by the end of the year, and slow to 3.6 percent by the end of 2017. Rents, simultaneously, according to Zillow, are expected to appreciate 1.6 percent over the next year—though there is room for debate for both indicators.
“More than 90 percent of the 111 panelists who participated in this quarter’s survey expect home value growth to be slower next year, and more than 85 percent of them foresee home value appreciation rates flat or lower compared to 2016 in every year through 2021,” says Pulsenomics founder Terry Loebs. “While those figures represent a clear consensus that home value growth will moderate in the coming years, there is no consensus concerning the pace of the expected deceleration. For example, the most optimistic experts project that U.S. home value appreciation will average more than 4 percent annually through 2021, while the most pessimistic expect an average annual rate of just 1.1 percent for 2017 and beyond.”
Overall, those in housing are downplaying the impact of short-term rentals on affordability—in fact, the results of the survey suggest the opposite: homeowners earn more from short-term rentals, allowing them higher affordability.
For more information, please visit www.zillow.com.
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