11-12-2025
The explosive rise of short-term rentals has changed the way we travel, invest and think about housing. If you’ve ever booked an Airbnb for a family trip or watched local headlines debate rental bans, you’ve seen this tug-of-war play out firsthand. But what happens when cities decide enough is enough and slam the regulatory brakes? That’s the question posed — and answered — in new research from the Daniels School's Ralph B. Siebert, Michael J. Seiler (William & Mary), and Liuming Yang (Chinese University of Hong Kong) in a paper titled “Airbnb or not Airbnb? That Is the Question: How Airbnb Bans Disrupt Rental Markets.”
Their study zeroes in on a California city that banned short-term rentals outright. The ripple effect? Long-term rental prices dropped by five percent — a striking statistic that’s bound to catch any property investor’s attention. On the surface, this suggests regulation can offer relief to renters without undermining supply. But, as Siebert points out, the real story is much more nuanced.
Imagine the housing market as a soccer match. Free-market advocates want fast play, no interference. Regulators are the referees, keeping the game fair. “You need referees on the field, setting the rules. But if they overdo it, the game falls apart,” says Siebert. The lesson: Rules matter, but so does restraint.
Short-term rental platforms like Airbnb have delivered big benefits. They give travelers choices and neighborhoods income, sparking new restaurants and retail shops. Local economies get a boost. These gains are real, especially in cities that rely on tourism and frequent events. But there’s a flip side. In residential areas, too many Airbnbs can squeeze regular renters and disrupt communities. They can also turn into a housing affordability problem, as larger U.S. cities show. That’s when public officials — and voters — start asking if free markets need a nudge.
So what’s the balance? The answer isn’t as simple as “ban or no ban.” Siebert and his colleagues stress that municipalities have options. Instead of sweeping prohibitions, cities might consider one-host/one-home rules, licensing requirements or targeted taxes. These approaches can tame the downsides, like noise or investor uncertainty, without crushing innovation. “We have a large variety to choose from, and we don’t want to push it too far — don’t over-intervene,” Siebert advises.
For business leaders and property investors, this research offers two takeaways. First, the regulatory landscape is unpredictable, and investment strategies should factor in sudden market shocks. Second, smart policies can unlock growth, both for housing and local commerce, without fueling runaway prices or displacement.
Crucially, the study also urges caution when making broad claims. Results from one city — and one set of rules — don’t always translate elsewhere. What works for Irvine, California, isn’t a blueprint for Dublin, Ireland, New York City or Telluride, Colorado. Each market has its own mix of stakeholders, from traveling families to local residents, entrepreneurs and city hall.
Ultimately, the Airbnb debate is a test of how we blend entrepreneurial energy with public stewardship. There’s no single playbook, but there are clear signals. Regulations should be evidence-based, flexible and sensitive to local context. Free markets thrive with clear rules and fair competition. Policymakers should recognize the trade-offs — and remember the vital role each side plays.
As cities continue to wrestle with where Airbnb fits into the urban puzzle, Siebert, Seiler, and Yang remind us that good referees keep the game moving, while great ones know when to step back. It’s not about picking sides — it’s about creating space where everyone can win.
