Household Earnings Increase and Labor Market Improvements are Primary Contributors

WASHINGTON, D.C., Nov. 20, 2019 (GLOBE NEWSWIRE) -- A new, in-depth report conducted by globally recognized research firm, Oxford Economics, has highlighted the key drivers of the housing affordability crisis facing American communities—and to what extent short-term rentals (STRs) are a factor in these challenges.

In the first-of-its-kind report, research economists have released a deep dive analysis of more than 2,500 counties over the course of four years (2014-2018) and included model extensions on urban areas and vacation destination areas. The dataset included over 70 local variables, ranging from average household income to the number of residential building permits in each county. The report was commissioned by Vrbo—a member of the Expedia Group family of travel brands.

“Expedia Group believes fair and effective short-term rental policies are not only achievable but vital to the long-term health of our communities,” said Amanda Pedigo, Vice President of Government and Corporate Affairs at Expedia Group. “Those policies are built upon a foundation of fact-based dialogue and collaboration.”

The report, set to be officially released at the 2019 National League of Cities City Summit in San Antonio, Texas on Thursday, November 21, 2019, found that increases in household earnings and improvements in the labor market are the main drivers of the housing affordability challenges facing many American municipalities.

There will be a special media briefing call with Expedia Group and Oxford representatives tomorrow, Thursday, November 21, 2019 at 11:15AM EST.

Media must RSVP to JSangiorgio@craftdc.com for call-in information.

Key Report Findings:

1. STRs account for a fractional .2 percentage point of the 4.3% increase in real rents over the course of the last four years.

2. Rent prices would have been only $2 cheaper per month in 2018 if STRs had remained at 2014 levels. 

3. Real house prices increased by 14.9% between 2015 and 2018, but STRs only contributed to 1% of that increase.

4. The average mortgage payment would have been just $105 cheaper per year – or around $8.75 a month – in 2018 if STRs had remained at 2014 levels.

5. The presence of STRs has not substantially driven the U.S. house price and rent increases over the past few years; A crackdown on STRs would not help address housing challenges. 

“We commissioned this study to gain a cleareyed and accurate understanding of the impact short-term rentals have on housing and rental prices in American cities,” Pedigo continued.

In both the house prices and the rental model, Oxford found that the effect of STRs on the dependent variable does not depend on the level of urbanization. In other words, they did not see a significant difference in the long-run impact of STRs on prices and rents between urbanized and rural areas.

“Adopting stricter regulations on short-term rentals is unlikely to solve the housing affordability crisis faced by many American households, in both the rental and homeowners’ market,” said Oxford Economics Senior Economist and project lead, Alice Gambarin. “It is important to weigh these potentially modest affordability benefits against the associated negative consequences for the local economy, including lower levels of tourist expenditures and tax receipts.”

The Oxford report has important implications for a policy debate that has focused heavily on short-term rentals as both the cause of the problem of high house prices and its solution.

“While the data concludes that the impact of short-term rentals on housing affordability is minimal, we remain committed to partnering with local governments to develop policies that balance the concerns of some community members with the important role vacation rentals have played for generations of homeowners and traveling families,” Pedigo concluded.

Media Contact

Philip Minardi, Policy Communications Director, Expedia Group – pminardi@expediagroup.com, (708) 574-4075

Joe Sangiorgio, Senior Communications Manager, CRAFT – jsangiorgio@craftdc.com, (202)-550-2709

Methodology

The study employs empirical econometric modelling to identify the key drivers of house prices and rents. The analysis is based on a database of all US counties (subject to data availability) between 2014 and 2018. After having established statistical relationships between the housing variables of interest and their drivers, Oxford Economics estimated the contribution that each driver made to the growth in home prices and rents over the study period.

About Oxford

Oxford Economics is a leader in global forecasting and quantitative analysis. Our worldwide client base comprises more than 1,500 international corporations, financial institutions, government organisations, and universities.

Headquartered in Oxford, with offices around the world, we employ 400 staff, including 250 economists and analysts. Our best-in-class global economic and industry models and analytical tools give us an unmatched ability to forecast external market trends and assess their economic, social and business impact.

About Vrbo

In 1995, Vrbo introduced a new way for people to travel together, pairing homeowners with families and friends looking for places to stay. We were grounded in one purpose: To give people the space they need to drop the distractions of everyday life and simply be together. Since then, we've grown into a global community of homeowners and travelers, with unique properties in 190 countries around the world. Vrbo makes it easy and fun to book cabins, condos, beach houses and every kind of space in between.

Vrbo is part of Expedia Group and offers homeowners and property managers exposure to over 750 million visits to Expedia Group sites each month. To learn more, visit www.vrbo.com.

Joe Sangiorgio
CRAFT
12025502709
jsangiorgio@craftdc.com