We examine the iBuyers’ business model and their impact on housing markets. We find that iBuyers tend to enter neighborhoods that have more easily priced and homogeneous homes, as price discovery is simpler and more consistent with their pricing algorithm in those areas. iBuyers purchase homes at lower prices than individual owner‐occupiers, and this acquisition discount reflects the benefits iBuyers offer to motivated sellers rather than distressed home purchases or unobserved lower‐quality housing characteristics. Last, a greater presence of iBuyers results in a higher volume of local housing transactions and encourages more home sellers to sell without listing.
This study focuses on legislative bans imposed on short‐term rentals (STRs) and evaluates their effects on long‐term rentals in Irvine, CA. We find that contract rental prices in the long‐term rental market decrease by 3.0% within approximately 2 years after the enforcement of STR ordinance. The results are primarily driven by the supply side for long‐term rentals. The decline in rents is more pronounced: (1) for long‐term rental units that have similar property characteristics as those listed through Airbnb and (2) for those located in geographic areas with greater Airbnb exposure before the ban was enforced.
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