Comical to suggest that AirBnB "ruined communities" or "destroyed the dream of home ownership" as if decades of federal, state, and local government policy had not already guaranteed those outcomes.
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AirBnB is a small factor. I suppose it drives up prices, but only because supply is so absurdly tight.
This happened even in areas where holiday home ownership and rental was common as a business.
The failure of government to grapple with the negative effects of Airbnb is a separate thing. Airbnb are, in fact, in control of their own morality.
The fact is you can go to travel websites, and the first 70k listings in some cities are for commercial hotel/share services running out of residential zoned homes.
Low-income people are easier to squeeze, and "with a computer" convenience doesn't make it an ethical securitization model. =3
Speaking as the son of an immigrant, married to an immigrant, for the people who can only think tribally, and must assume I am doing the same.
I think you'll find that zoning/planning permission is the real bad guy here. That and a failure to understand Adam Smith and implement the ideas of Henry George.
Thanks for the unnecessary correction, when it's pretty clear that my comment you are replying to includes the words "even in areas where holiday home ownership and rental was common as a business".
I don't know why it did not happen before.
All I know is that the situation in coastal resort towns in Cornwall, Devon, and elsewhere in the UK changed utterly when Airbnb became a thing.
I could guess that barrier to entry was always an issue before then; the relative complexity and process involved in listing a property with e.g. Hoseasons, who were the dominant player in the 80s and 90s, and who inspected properties and had greater requirements.
But either way, Airbnb did unambiguously change things. Ask people who lived in Cornish towns whether they're even able to rent a room or a flat.
It's a defect at the intersection of capitalism, property ownership, and democracy.
Nimbys are basically hukou advocates in disguise. After all, it's the only solution if you don't primarily place the blame on lack of construction.
As far as I can remember AirBnB didn't cause the 2008 financial disaster that really sealed the fate of homeownership in America for the next decade for a lot of Americans.
AirBnB has provided an avenue to generate income for small business owners in rural communities. Urban areas are struggling because they aren't building more.
BUILD MORE. How difficult is it to understand that?
Unless you were the very first person in the entire area to think to do so, then the existence of that very market for you to rent spare rooms on is actually driving up the prices of properties so you have to do so.
It's also driving up the prices of long term rental, because landlords make more money in the short-term rental market. The prices of long-term rental also affect the floor price of permanent ownership.
But much of that boom has been tearing down multifamily apartment complexes and replacing them with luxury townhouses and condos instead. Almost nobody is actually moving into those places. They're 90% being purchased by investors, mostly out of state investors, to be used as Airbnbs. There is a significant categorical difference between investment property today and investment property before Airbnb. Before Airbnb, you rented via long-term leases, or you bought hotels and apartments in really shitty neighborhoods to use as weekly or even daily rentals for homeless people with jobs. Now you can buy as little as a single unit and the infrastructure to rent it out daily as a hotel room to much wealthier travelers exists without you needing to do anything extra.
With predictable results. Even in neighorhoods with little to no zoning restrictions, with virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
That is fair, but also misses the point. The issue with AirBnB is not that they are evil company and must be regulated. It's that they operate in a system where housing is an investment vehicle due to artificially constrained supply and tax system that is riddled with well intentioned and widely abused property ownership cuts. At worst they have accelerated the issue rather than caused it.
> Airbnb are, in fact, in control of their own morality.
Not entirely, they are a publicly listed company and will get sued if they do anything that will hurt the stock price.
There are literal physical limits on this in many coastal villages and towns -- for example pick almost anywhere on the south west coast of the UK. Not only is the area on which houses can be built restrictive due to geography (and often geology), the transport infrastructure does not scale. New property building both has not caught up with, and probably cannot catch up with, short term demand.
As it happens, a collapse seems likely, because local sentiment is turning against them so fast and because of general economic weakness; the number of "thriving holiday let" properties that are on the market now suggests that Airbnb's own accelerating rental costs problem is going to cause a bit of a bust.
But that bust will not benefit most of the people in the areas affected where the price of a small house is twenty to thirty times the average salary of would-be-first-time-buyers. Those people are leaving, so there will instead be a ghost town. And the sheer number of residents who are temporary has destroyed the potential for long-term stable infrastructure businesses for residents.
> Nimbys are basically hukou advocates in disguise.
It's nothing to do with nimbyism, is it? Nimbys are property owners. The problem only affects people who do not have back yards. They can no longer afford the houses at the prices at which they will be built and the rates at which they can be.
Then you're a landlord who has purchased more of a scarce resource than they require (a house larger than you need) who has then turned around and rented access to the extra you have to people who can't afford a home of their own, and in so doing have driven the cost of homeowner-ship just slightly higher, which was the reason you couldn't afford it in the first place. Repeat that a few thousand times and that's a huge contributing factor to why housing is in such a dire state here.
You haven't solved anything. You just went from being an exploited person to being an exploiter instead, taking advantage of people you should have solidarity with and inflicting the harm the system was inflicting on you, onto them instead. The system will continue feasting on people who can't manage the same as you did, and you now posses wealth you did not earn.
What I said was rather more specifically qualified than that.
NIMBYs are property owners who vote for restrictive housing development policy in order to prop up their own home values.
Eliminate the NIMBYs and you end up with a lot more people who can have their own backyard.
Even if that wasn't the case, I don't see a problem with buying slightly larger than is necessary, because (for example) perhaps they're planning to have a couple kids in the next few years, but will rent out the extra space until then. Moving is transactionally expensive, and expecting someone to move every few years as their space needs change is unreasonable.
Regardless, you seem a bit overly judgmental about this entire situation, and about someone you don't know at all.
But that's the key, really. In most places, banning short-term rentals will not move the needle on housing affordability.
It's like trying to optimize the thing that's causing 3% of the slowdown when things that are responsible for 40%, 30%, and 25% are right there, staring you in the face.
Landowners that have made improvements to the land and seek financial compensation for those improvements, in this case in the form of providing a service, is NOT rent seeking behavior.
That is NOT exploitation.
This is even basic economics from an extremely leftist POV, where those that have added labor value, that is improvements to the land, in this case providing a service and perhaps building a unit, managing them, etc. should be compensated for their labor.
Like this is extremely basic stuff.
Except -- if it took the combined might of Uber's VCs, and the disposable human battering ram that was Travis Kalanick, just to disrupt the puny little taxi industry, imagine what it would take to change housing. Ain't never gonna happen.
The thing that's "ruined communities and destroyed the dream of home ownership" is the incapacity of the community, "where they were brought up", to actually change and accommodate increasing demands.
In reality these individuals from these communities are using Left rhetoric to advocate an extremely conservative position. That is for the community to remain as is, in the exact way such people were "brought up", such that no progress, no change, no additional value is added to the communities.
What ends up happening because of this confused policy is that the individuals in these communities both lose out on their hometown, the community ends up changing, and it becomes impossibly expensive for everyone in the community. IE the worst of all options.
Instead. Build more. Build vertically. Build better infrastructure. Provide for local residents an opportunity to "buy-in".
This kind of cloaked conservatism, masquerading itself using leftist rhetoric ends up being confused from a policy POV.
No, I don't. Rent-seeking is derided behavior by basically everyone who isn't rent-seeking.
If you buy property, improve it, and sell it, there's your profit for providing that service. No ethical lapse whatsoever, unless you used that godawful gray laminate that every flipper uses. Then I'm mad at you still but that's a different reason.
If you own a thing that people need, and you gate access to it behind a paywall while maintaining ownership, and extract value from those people so they may use it but retain full ownership and control of it, that's rent-seeking and it sucks. You're the economic version of wind drag.
Yes, that includes the 98 year old lady who rents out a room to fill the gaps left by social security to the nice young man who's going to college in the area. Still value extraction. That young man is losing the value of his labor because he has to live somewhere and she has space he can live in. That's unethical.
There are rural/tourist-dependent communities that had an adequate supply of housing when the only visitor accomodation was licensed as a hotel/motel/inn/B&B/hostel. They didn't need a lot of extra, but some slack to accomodate tourist season workers, and occasional new arrivals.
Then AirBnB came along and converted not just the slack, but some residential property that would otherwise have been available for long term lease, into much more profitable short term rentals.
Income at licensed residential stays sometimes drops; short term and long term housing options either vanish or are reduced; problems begin to occur that were not present before.
None of this is in any way dependent on the failures caused by zoning, permitting and housing policy.
This story has been repeated at tourist locations across the world.
AirBnB was fundamentally a message to anyone with residential property: you can make more money with it as a short term rental than via any other use. This is why in many locations we've seen new construction of residential property intended solely for short term rentals. Nobody wanted to build that stuff when it was only going to be LTR; AirBnB changed the game.
dude! godawful gray granite or go home :)
> virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
If there is strong demand for housing, you might see bungalows turn into town homes or townhomes turn into mixed use 3 story flats... Which tend to be much more economically productive for the local gov anyways because the cost of infrastructure & services per person drops.
Rent-seeking is something specific. If we can't get that right we're not going to get far into the discussion. Not all rents are the same.
Hotels rent rooms. But they are not the same as rent seeking.
If you're not creating new wealth/value add, and instead exploit rents by mere virtue of owning, then it is rent-seeking. If you're adding value, like providing a service or other additions, then no it's not rent seeking. The 98 year old lady? Probably rent seeking. The couple doing AirBnB? Probably not.
Why?
AirBnBs, like hotels, tend to provide a genuine service that adds value. The listings are in a competitive market, where people need to improve the living spaces in order for them to get rented out. This doesn't take into account the various hospitality businesses that have emerged in various rural communities because of AirBnB. It's an entire industry.
That is Hotels/Hospitality businesses are NOT rent seeking just because they rent out rooms or provide services on land they own.
Who is Rent-Seeking?
The people preventing new housing/infrastructure from being built are the ones rent-seeking. They artificially manipulate market conditions by restricting supply, driving up land value, and thereby generate unearned income. Income that isn't from productive improvements on land but from mere ownership of land. That unearned income on land is rent-seeking behavior.
The complicating factor (which they miss) for a tourist region is that if your "product" is (in part) Small Town Charm, or Rural Character, then you can't build, baby, build without destroying the economic underpinning of the entire community. I wish my hometown had allowed for more hotels (like, decades ago - they were horribly regulator-captured for ages), and had the wisdom to restrict STR before it became such a thing.
For anywhere with a non-tourism based economy, however, I think they are correct: increasing supply is the only possible solution.
It only occurs to me upon writing this that areas without any existing tourist infrastructure are becoming tourist-dependent on the basis of STR, which might be the worst of both worlds. Those places need to allow hotels and (actual) B&Bs, before they ruin their communities through STR-tourist dependence.
And the outcome was bad for people living in these targets for mass tourism. Unless they were a YIMBY of course and wanted a hostel in their backyard.
'NIMBY' is like 'Karen' or 'boomer'. Some sort of convenient scapegoat, deserving or not.
https://medium.com/chamber-of-progress/new-nyc-data-shows-th...
The classic example of an economic rent is a feudal lord putting a chain across a river and charging a toll. This is economically unproductive because it's just putting a price on something that was free (and, you have to assume for the example, non-rivalrous). This is why the sibling comment points out that the rent-seekers in the housing market are more like the people seeking to constrain supply via zoning and regulation.
I suspect the real reason owning is cheap is not that it's inherently better, but because everything is cheaper when you have lots of money.
This is said rather matter-of-factly, but how do you propose doing that in a society with democratic values (ie people get a voice in their governance) and also where 70% of most household wealth is in their property?
Consequently it is always likely that one might want at least one more room than is needed by the family. It additionally provides buffer overflow should the pitter-patter of tiny drains on one's resources appear.
In such circumstances renting out a spare room on a longish licence should necessarily reduce rents since now there is an option which is likely to be cheaper. Renting out a spare room for other people visiting ones city should similarly have had a depressive impact on the price of hotels or an improvement in their offering.
Given the inconvenience and reduced amenity one gains from living in a house under multiple occupation there is further no specific reason why it should be the case that this does not more than offset the cash remuneration meaning there is no in principle reason why the capital cost of such a property should increase.
it has absolutely done so in the same way that a bunch of motels springing up in your neighborhood would completely change it and not necessarily for the better
it also greatly constrained the availability of housing for locals, therefore pushing up prices, so that people not living in the city could visit for cheaper; probably ok if you're in the tourism business, otherwise not
The vast majority of AirBNBs are the entire house or some separate guest cottage. Many are owned and managed by larger companies. Or by people who own multiple houses.
The individual home owner renting out a room so they can cover their mortgage has become more of an outlier.
Americas are a lot bigger than the USA, and the unicorns had a disruptive effect wider still.
If we, as a society, took this into account we would make it easier to build more housing.
The fact that we don't is the moral, ethical, and economic tragedy of our age.
The only downside for buyers of the past? It was a poor neighborhood. All of those multifamily apartment complexes being torn down were full of poor people, mostly dark-skinned, many of them non-English speaking. Now that their landlords spent the past 15 years doing zero maintenance until they could get the buildings condemned and force all of the tenants out without needing to have grounds for eviction, they can sell the land, and it doesn't make any difference if the experience of actually living here gets shitty because of all the parties and not having any neighbors. The buyers don't care because the buyers don't actually live here. The single-night renters don't care because they don't live here, either.
Yes, it's a failure of government policy, but I don't think it's hyperbole to say that AirBnB and its ilk destroyed that community. That is, assuming you define "community" as a group of people and not a group of buildings.
Airbnb demonstrates that there was clearly substantial demand for "house style" hotel rooms but hotels chose not to provide them. In most hotels where a room is $400 a suite with a space to work, watch tv and cook, might be $10,000. The hotel market optimised for the business man travelling alone to conferences and paid a price for it. Even my favourite hotel on earth does not provide an "ordinary menu" for the nights where you just want to curl up with your loved one and watch a film - it's Michelin star dining or bust.
In most hotels the only amenity that a hotel offers that is "better" than the home experience is a swimming pool and daily housekeeping.
Who, but the richest amongst us, has their bed linen changed _every day_?
If hotels had been built as apartments with no zoning restrictions arbitrarily placed upon them there would have been an option for the hotels to adapt by offering their rooms up on a long lease.
Look at your local suburban school district's bond: you'll probably see some age-based exemption on paying to get support because old people are by far the most engaged. Is that democratic? In the sense that its based on votes of a voluntary electorate, yes. Is it the representative will? Clearly not! You want to cluster elections around high turnout to maximize representation.
Where do you think the AirBNBs came from? Some people decided to move out, and the people that moved in decided that others would get better use experiencing the property part-time as reflected in market prices. Would you ban them from making this choice? Would you screen every buyer not based on their own assessed price but on ever so shifting "intent"? Would you make the intent they declare at the start binding?
EDIT: I'll bet you $100 to your charity of choice that physical constraints aren't binding in the case you're thinking of (this could be shown by, despite a lax / encouraging planning environment, no one building anything).
Zoning laws are, for the most part, a mistake. Any solution to housing prices that isn't a boost in supply either leads to scarcity or hideous Danwei-style planning that reaches into peoples life plans and the ability to afford a future.
I'm skeptical that national zoning is feasible if for no other reason than the diversity of land and land uses.
It's a very bad thing for people to invest in a fundamentally depreciating asset and expect a return, there's literally no other way to get a return then besides inflation.
And sure, returns have been low, but that's because the real interest rate in Japan for the last 30 years has been negative! You can't get a return if the fundamental balance of loanable funds leads to a negative real interest rate, you need stimulus instead, which they've been trying for over thirty years! And shocker, now that we're seeing Japanese interest rates rise, Japanese stocks are shooting up!
>Japan does this just fine
You seem to be implying Japan's scenario adequately mirrors the U.S. In other words, they have a high proportion of their net worth tied up in real estate, which is what I am pointing to as a driver of NIMBY-ism. If that analogy doesn't hold, then I would argue it's not an apt analogy and probably doesn't offer much in terms of policy insight.
Also, in the US, I don't think you can argue that real estate in general is a "fundamentally depreciating" asset. I don't think the recent history is illustrative, but over the long term real estate tends to be positive.
Of course in the US there's been huge capital appreciation: housing and shelter went from 10% of CPI in the 60s to 40% of CPI today! Are you going to keep drawing the line and say "yeah, it's totally reasonable for us to continue it to have capital appreciation out-of-line of actual yields when supply and demand are balanced" - like how far is enough for you? 50% of CPI? 60? You're never going to be able to get the real appreciation that we've had over the last 40 years because that'd take us to 160% of CPI!!!
Regardless, all of that is a digression from the original question: does Japan have a similar dynamic where the bulk of household net worth is tied up in real estate? That's central to my claim that people are more protective of the assets tied to their wealth. In other words, we need to be careful about thinking Japan provides an example if there is a different wealth dynamic. It seems like you are trying to have a different conversation.
To be generous so as not to think you just have a problem conceding a point, you seem hung up on the moral argument. I’m not making a moral argument. I’m explaining the how it is, and not making a claim about how it ought to be. FWIW I think it’s stupid that people have 70% of their wealth tied up in a non-liquid asset, but that’s the scenario we’re dealing with. People are incentivized to keep their wealth high, and especially home wealth because it gives them equity to borrow against. Likewise governments like having high property values because it gives them a larger tax base.
So there’s two salient aspects to the point: 1) people have a say in how they are governed in a democracy and 2) people/govts have economic incentives to protect their wealth/tax base. NIMBYism is the convergence of both. So which do you disagree with?
I agree that, insofar as local governments go, NIMBYism is the inevitable convergence of both, and if the story stops there, there's not too many scalable solutions. I guess my point is that NIMBYism need not be the convergence of both in the general case. In CA at least, forming a YIMBY coalition is (obviously) democratic and is formed in response to housing being 40% of CPI (so trying to increase aggregate wealth). The reforms need not cause nominal declines in housing prices! Merely stopping growth is enough to cause real declines.