Trend of short term rents not impacting on US housing market, says new research
Short term home rentals such as those offered in the internet via companies like HomeAway and Airbnb do not have a meaningful and large impact on housing affordability in the United States.
The latest quarterly house price expectations survey from real estate firm Zillow and Pulsenomics found that nearly all respondents did not think the trend is impacting the property market.
Half of the experts surveyed said the impact is meaningful, but small, just over 40% said the impact is not meaningful and about 5% said short term home rentals do have a large impact on housing affordability while 3.8% were unsure.
Cities across the country are debating the role short term rentals play in housing affordability. One view suggests short term rentals subtract from the supply of long term rental homes and contribute to rising rents. Others argue short term rental units give home owners an additional source of income, allowing them to more easily afford a monthly mortgage payment.
‘Cities across the country are grappling with housing affordability issues, especially in places with rapidly rising rents and home values. In some hot West Coast markets it’s not uncommon for renters to spend 40% or more of their income on a monthly rental payment, when historically that number was much lower,’ said Zillow chief economist Svenja Gudell.
‘Inventory plays a large role in this affordability crisis as 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,’ she added.
Indeed, the latest housing trends report from Zillow shows that only 7% of home owners rent out, or are planning to rent out, all or a portion of their primary residence.
Overall, the experts surveyed, which include economists and researchers, said they expect home price appreciation to be at almost 5% by the end of 2016 and slow down to 3.6% by the end of next year. Zillow forecasts rents across the US to appreciate by 1.6% from October 2016 to October 2017.
More than 90% of the 111 panellists who participated in this quarter’s survey expect home value growth to be slower next year, and more than 85% of them foresee home value appreciation rates flat or lower compared to 2016 in every year through 2021.
‘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,’ said Pulsenomics founder Terry Loebs.
‘For example, the most optimistic experts project that US home value appreciation will average more than 4% annually through 2021, while the most pessimistic expect an average annual rate of just 1.1% for 2017 and beyond,’ he added.