> and if we want actual competition in rent prices, then the supply would have to vastly exceed the demand and not just meet it.
So, having less than 1% of the housing stock go to AirBnB supposedly makes cities unaffordable but increasing the supply of housing will not have the opposite effect until supply greatly exceeds demand? Why?
Let me clarify, the increase in housing supply is a reaction towards an increase in AirBNB's and may not cancel out the decrease in housing supply due to those AirBNB's. I made the comment to say the decrease in long term residences is not as great as the number of residences allocated as AirBNB's.
One hotel converted into condominiums create 1100 residences,[1] out of < 30000 AirBNB rentals in NYC. It's such a "problem" the council wanted to ban it. [3]
Actually what I'm saying is that much more supply is the thing that will drive prices down.
(And also that the number of units that are effectively full-time rented on Airbnb is just about 1% of the entire off-rental-market supply--let's get that 99% back!)
My comment was definitely flippant but in large metro areas airbnb at the margin leading to a rapid price increase is not the problem. It’s supply. No supporting evidence here because it’s pretty broadly available for many real estate markets.
I understand what you're saying but that doesn't contradict my point. If the appearance of AirBNB suddenly causes a housing shortage than there was presumably a lot of pent up demand for hotel-type space in the market that was being artificially restricted by hotel regulations, and the regional housing supply was fragile in the face of increased demand.
Across the world right now most major cities are struggling in the face of growth, but it doesn't really make sense that they should be. I live in San Francisco where housing supply is critically low, but our annual growth rate is only around 1%. It's deeply concerning that our institutions crumble and in the face of a 1% annual growth rate.
There's indeed not enough housing supply to meet the total demand. There are various reasons for that, but that's the ground state. What AirBnB does is add to this an incentive for existing supply to further shift from serving city residents to serving tourists. Since housing supply isn't limited by low demand but by external and difficult to change factors, what AirBnB does is just making a bad situation much worse for cities worldwide.
I know it sounds like free market dogma, but I swear this is true: supply grows to meet demand. Airbnb will just encourage more housing to be built, by creating a new short term housing market that until now had not existed.
> The problem with housing is that the supply is very fixed.
This claim seems to be the root of every anti-AirBnB argument: AirBnB rentals eat into the resident housing supply.
But this is simply solved by zoning and regulation. In any given city there is some number of residents and some number of visitors, and some number of permanent and temporary beds for them to sleep in. Yes, AirBnB shifts some of the housing stock from resident to visitor - but, if that's what economic forces are commanding then the zoning & regulation should adapt, not fight it. It's not a capacity issue, just one of allocation.
But in the article it says towards the end that Berlin in building 50K new units in the next 10-15 years. So in addition to banning AirBnB they are also increasing supply. I am unsure how or why "technology" plays into it unless you mean construction technology?
> That, presumably, is one reason supply is restricted ("fixed")
(I'm the grandparent.) Yes, this. I'm all for new construction to improve supply and a streamlined bureaucratic process so that it can happen more quickly.
Practically speaking though, you can look at any city that's had a problem with AirBnB (Berlin, San Francisco, New York, Barcelona, etc. — pretty much anywhere desirable to visit) and new stock isn't coming online anywhere close to quickly enough to counteract the market forces introduced by AirBnB. As it stands today, building is a very slow process, and it's likely to remain that way for the foreseeable future.
There are a lot of people out there who argue that building more houses won't help solve the high cost of housing. I have also found a lot of those people complain Airbnb is driving up pricing. To not acknowledge the supply problem ( and the supply solution ), but to say the minimal change in demand caused by Airbnb is the problem to me is just dishonest.
Articles like this are supremely annoying. The devastating effect is caused by the fact that they aren’t building enough housing.
The problem is not the demand for housing, it’s the supply.
Don’t blame Airbnb when you refuse to build enough housing, the markets going to figure out how to market.
> The solution to the "Airbnb problem" of rising home costs is less regulation, not more.
Regulation around short term rentals and regulation around construction and zoning are two very different things. I agree that every city can probably benefit from more progressive construction policy, but that doesn't mean that restricting short term rentals isn't also a good idea.
It's nice to think that the free market combined with liberal policies will produce so much capacity that all problems around pricing (and by extension AirBnB) will be solved, but we haven't seen much evidence that this can occur in a timely enough manner to come anywhere close to meeting demand, which may also be increasing over that time. Here in San Francisco for example, we've seen a massive construction boom over the last few years, but it's having no effect on prices because even though thousands of new units are coming online, the pent up demand still vastly exceeds the new supply.
Even assuming you could solve the problem with construction, the solution will come on a decade scale whereas AirBnB can entire change the face of a city's rental market in a few years, or less (take a Berlin for example). Popular cities would still need restrictions on AirBnBs to keep the problem in check until longer term increases in housing capacity can be put in place.
> A systemic driver of this bidding war for rental properties is the "AirBnB" model of monetizing individual properties to compete with hotels and resorts for lodging... This has led to an artificial scarcity of housing in popular tourist destinations.
This is fundamentally untrue, there is nothing "artificial" whatsoever.
AirBNB allows a city to host a larger number of tourists than hotels alone can provide, which stimulates the local economy with lots of spending etc. This is not "artificial", it's real local economic growth.
The scarcity of housing is then not caused by AirBNB -- it's caused by not constructing enough housing.
It doesn't matter whether demand for new housing comes from tourism or people moving to the city to reside. Demand is demand, and tourism is not "artificial". Nobody calls people moving to the city for work an "artificial" cause of scarcity, and neither is tourism.
Sure, AirBnB certainly isn't the only cause of rising rents in Berlin. The city's become an incredibly attractive place to be over the last decade, and that's almost certainly the foremost reason for rent increases.
But AirBnB is contributing something to those rising rents, and unlike the desirability of your city, it's something that you can control for.
I (along with probably most people that share a similar position) would argue that regulating AirBnB is good, but not adequate. Pretty much every large urban development in the world (SF, London, NY, Berlin, HK, etc.) is experiencing the same problem that because they're desirable they're also automatically unaffordable. We need to figure out how to put roofs over people's heads by building much more, and much more cheaply.
It's probably a case of adding insult to injury. Looking at AirBnB specifically, their most vocal opponents seem to be cities who already have too few apartments left to rent. When a sizable portion of the remaining few apartments is then put on AirBnB rather then rented, rent prices go even higher than they already were.
At least, this is what happened in Berlin (and AFAIR also some other large German cities), which is why Berlin is looking into banning AirBnB (by requiring special permits for vacation homes). Source e.g. http://www.spiegel.de/reise/aktuell/bussgelder-ab-mai-berlin...
So, it may not be AirBnB's fault primarily. They're just making bad situations even worse.
Supply increase difficulty has not changed recently. Demand increase has. So if we're going to blame it on one factor, it makes sense to pick the one that has changed and is easier to control.
Less friction in increasing supply is also not an unalloyed good. You can look at the commercial office market, which is much less restricted and has huge boom/bust cycles. And that's before we get to the externalities of rapid housing growth.
I'm actually for increased supply, but I'd rather we stuck with better arguments for it than helping Airbnb get off the hook for the reasonably forseeable consequences of their actions.
It's possible that while AirBnB increased demand for housing, the market could have responded by building and allocating more real estate to housing, resulting in an equilibrium. So it is at least plausible to me that an implosion of AirBnB might be good for renters in the short term as there is an over-allocation of housing, but that without AirBnB, market rates will increase to about where they were before as supply drops over time in response. The whole thing is complicated enough that there's no way I'm going to trust any single, non-academic article on the subject.
Building more units might push down rent, but that assumes that the increase in housing supply won't be offset by owners who will simply convert those new units into more Airbnbs.
If landlords think short-term rentals are better for business than lease-based tenancy, then the amount of housing that would need to be built is much higher than demand.
Hopefully some regulation will be enacted as a result of this study but I won't hold my breath. Way too much money to be made by banks and RE agents in artificially restricting supply.
> and if we want actual competition in rent prices, then the supply would have to vastly exceed the demand and not just meet it.
So, having less than 1% of the housing stock go to AirBnB supposedly makes cities unaffordable but increasing the supply of housing will not have the opposite effect until supply greatly exceeds demand? Why?
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