Airbnb provides a way to earn money when you are not living in your apartment.

In any Economic 101 course, you’d learn that the fundamental problem of any economic system is figuring out how to deal with unlimited wants, when there are limited resources. With capitalism, our solution is price. In theory, prices curb people’s wants so they only buy the resources they plan on using.

In practice though, most of us buy things we end up wasting. We pay for electricity, but we waste it by leaving the light on when no one is in the room. We pay for food, but we waste it by leaving leftovers no one will eat.  Because we do tend to waste resources, one solution is figuring out how to recycle them or sell off the extras.  Figuring out how to sell off extra food and electricity efficiently is tough. But at least there is a system now to rent out unused homes.  Forbes has more on the recent trend.

Airbnb is a website that allows people to advertise their home, and rent it out to people nightly or weekly. This is ideal for those real estate investors who have extra property lying around, those folks who have extra homes in different locations and those work horses who are constantly traveling for their careers. Without Airbnb, the aforementioned people would be wasting their property, while tourists would resort to overpriced hotels.

Right now, Airbnb seems trustworthy for both homeowners and guests: there is a rating system so homeowners give the best experience possible and there is $1,000,000 insurance coverage in case of robbery or vandalism by guests. The company grew from 120,000 listings in 2012 to 300,000 listings now. Clearly, Airbnb solves an economic inefficiency and that’s why people are buying into it.

Recently though, there have been issues with government regulation.  Airbnb might be a way to increase efficiency by selling time in unused property but it still has legislative hurdles to jump before it can really take off.  Definitely a trend to watch for those in the real estate business.