Thinking about listing your AirBNB in Seattle? Check out this pricing tool first!

As the real estate market continuing soaring during this global pandemic, are you thinking about investing in an apartment and renting it out as Airbnb in Seattle? Or are you considering renting out your spare room in your house to get some extra cash?

This article is for you!

In this article, I analyzed the listing prices in different neighborhoods in Seattle and provided you an overview of listing prices and total listing during the year to help you decide the optimal location and listing time for your Airbnb.

To make it even simpler, I developed this prediction tool with a Machine Learning algorithm for you to estimate your listing price based on your location and room type. With this tool, you can ensure your listing price is reasonable and competitive; in the meanwhile, it will generate the maximum profits for you!

Sounds good? Let’s start with an overview of the listing analysis.

For this analysis, I analyzed the data from the Airbnb website in 2016. These datasets include the information of the host, property list, and listing information throughout the year. The three business questions that I focused on in this analysis are:

1. What are the differences in listing prices among different neighborhoods?

2. How do listing prices change during the year?

3. How should you price your listing based on location and room type?

Part I: Comparison of listings in different neighborhoods

Let’s first take a look at the total number of listings in different neighborhoods. It looks like there are a lot of listings in central Seattle and northwest Seattle, but only half of the number of listings in a place like downtown Seattle and Magnolia&Queen Anne.

When we look at the listing price distribution among different neighborhoods, we can see that the listing price in downtown Seattle and Magnolia&Queen Anne is higher than in other areas. Some of those listings in those two areas are significantly higher, which suggests some luxury options (maybe have a great view of the ocean/lake as well!).

These two figures suggest that if you are thinking of investing in real estate and starting your own Airbnb, those two neighborhoods could be your first choices to check out. There is less competition, but potentially a higher profit margin!

Part II: Price trend during the year

Let’s take a look at the seasonal variation of the number of listings and the listing prices.

The chart below shows the number of listings dropped in the summer, which is interesting. That might suggest that people are less willing to rent their place out in the summer and might keep that place for a family gathering.

Meanwhile, if we look at the listing price during the year, the price is highest in the summer. It makes sense. It is just a simple demand and supply problem. There is less supply but higher demand in summer.

So thinking about renting out your room? This summer will be a great time to start!

Part III: Estimate listing price based on location and room type

Now you have a general idea of the locations and time of the year best for AirBNB listing in Seattle; you are serious about starting this business. But you want to know how much should you charge? What are the critical factors that impact the pricing?

To help you answer this question, I developed a Machine Learning Model to predict the listing price based on the following factors:

1. Room info (accommodates/bathrooms/bedrooms/beds)

2. Month of Year

3. Location (Central/Downtown/Magnolia&QueenAnne/Northeast/Northwest/Southeast/West)

4. Property type (Apartment&Condo/Boat/House/Other/Outdoor_Room/Outdoor_Tent)

5. Room setup (Entire_home_apt/Private_room/Shared_room)

6. Bed type (Bed/other)

I tried both Linear Regression and Random Forest models and found Random Forest provided the best results (r² = 0.861). What is even better about the Random Forest model is that it can analyze feature importance. From the figure below, we can identify the number of bedrooms/bathrooms/beds and how many people you can host in the room are the major determining factors in pricing. It tells you that more rooms in your AirBNB will be preferable since most people booking AirBNB are traveling with family.

Want to estimate how much you should price your AirBNB now? Check out my Github for the prediction model to predict your listing price!

For example, if you have a one-bedroom and one-bath apartment that can accommodate two people in the central region, based on the model, you can charge somewhere around $77 in the winter season. But if your apartment is in downtown Seattle with three bedrooms and two bathrooms, lucky you! You can ask for over $450 per night!

Want to know more? Check out my Github here.