Spain or Argentina will win the FIFA World Cup on Sunday, but another victor from the tournament is short-term rentals.
Throughout the 39 days of play, tens of thousands of Americans listed their homes on rental platforms such as Airbnb and Vrbo for the first time.
During the group stages in June, the number of short-term rentals in host cities jumped 12 percent compared with the same period last year. This was bad news for hotels, which wound up with lower occupancy rates in some places than they had the year before. But it was great for visitors who managed to avoid the price hikes hotels tried to charge in anticipation of higher demand.
It was also great for property owners to cash in on the global sports extravaganza. Airbnb offered $750 bonuses to people living near host stadiums if they listed their homes on the platform.
This provides a useful, if obvious, economic reminder: The most elegant solution to high hotel prices is to expand the supply of available rooms, not to accuse hospitality companies of greed or charge more taxes and fees. Markets, when allowed to function freely, offer cheaper substitutes.
Unfortunately, too many U.S. cities have made it functionally impossible for that to happen. In New York City, for instance, someone who wants to rent out their home must register their place with the government and get a verification number for every listing. For rentals shorter than 30 days, the owner must be present throughout the stay.
City officials refused to lift those restrictions ahead of the World Cup. That was a gift for homeowners in neighboring New Jersey, who gladly rented out their properties to soccer fans.
The Big Apple, unfortunately, is far from alone. Many cities, such as D.C., Los Angeles and Chicago, restrict people from renting out properties if they are not their primary residence. Some places, such as Las Vegas, require hosts to get a license and pay an annual fee.
These restrictions always get pushed by a coalition of rent-seeking hoteliers and the unions for their workers. They fund astroturf campaigns to scapegoat short-term rentals for legitimate frustrations about a lack of affordable places to live.
In reality, whole-home rentals comprise 1.2 percent of the housing supply. The real drivers of higher housing prices are local zoning and land use restrictions.
The summer after next, Los Angeles will host the 2028 Olympic Games. Will politicians in Southern California allow their residents to cash in on the influx of tourists from around the world?
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