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.
The article you cite is not supporting your view. In fact it lists many cases where Airbnb (or short term leases in general) have a significant effect on both sales and rental property supply and is pushing up prices as a result.
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.
Both of us look at the same evidence, just interpreted differently.
If the stats you brought are correct, that means that there exist a considerable amount of tenants which couldn't afford their apartments if not for Airbnb. Ultimately, as rental markets balance their price against vacancies, market rates will go up.
Precisely this. Go to any city in the world where new housing is not artificially constricted by local governments and you will find that the effect of airbnb rentals on housing prices are minimal.
I will not deny that the presence of airbnb rentals in a city can drive up the incremental cost of housing, but it is a proximate cause, not the root cause. The root cause is artificially constrained supply.
No, we have been ignoring your point because it’s one of those Econ 101 world views based on assumptions that have no basis in the real world and actual human behavior. You can’t look at the number of Airbnb rentals and conclude it’s not having a significant impact on the market simply based on the raw number of units. What we know from all systems theory is that a small portion of things has the majority of the effect. In this case, short term rentals are very likely setting the upper bounds of the pricing range.
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!)
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.
I call bullshit to your bullshit. You don't know that AirBnB is skewing the market. You just see the market sucking, AirBnB existing, and went with a Post Hoc Ergo Proctor Hoc. There are so many things skewing the housing market. The rules on commercial mortgages, large corporate landlords engaging in cartel pricing, perverse incentives, wealthy people foreign and domestic buying space to park assets but not doing anything useful like renting it out or living in it, the list goes on and AirBnB is at the bottom. AirBnB provides an invaluable service, filling the niche of flexibly scaling housing for when its too long term for a hotel and too short term for a lease. Its the go to option for when you need to patch over a living situation issue just long enough to find a real place. AirBnB doesn't remove housing from the rental market because AirBnB is a rental market.
My point was more about quantities - assume 1:1 elasticity, there are like 11,000 Airbnbs in nyc (assume all investor owned / 100% dedicated to Airbnb), that’s like 0.3% of the housing stock in NYC. If you sold them all tomorrow it would be like one months sales.
My main point being that people expecting any sort of regulation on Airbnb to have an effect on pricing seems naive.
Fair point. This housing boom is largely caused by wealthy investors bidding up the price of single family homes, with AirBnb completely unrelated. There are also some urban-suburban migration dynamics at play. I mentioned AirBnb to point out that this isn't just a new issue. And while vacation rentals have always been a thing, they were formerly centered around vacation destinations. Now, they can be anywhere, and the internet makes it possible to browse and compare prices anywhere in the world. It is now economically feasible to own several vacation rental properties in small cities, which creates a pressure on supply for housing locals. And if you can earn a month's worth of rent in two weeks of AirBnb renting, the price of rent for long-term tenants is either going to go up or you are going to switch to AirBnb.
There is no correlation between the rise in rental prices in SF and Airbnb. It's absurd to think that they could impact that at this point. A large chunk of the hosts on the site rent out a room in their own homes. If you want someone to blame for the raising prices, I think it's more rational to point the finger at the spate of IPOs and the newly minted folks who are in the buying market at the moment. Or if that's not your cup of tea, then perhaps blame the size of the city (as it can't get any bigger) or even more appropriately, blame the blood hungry landlords who still insist you pay by check and raise their rates by at least 30% every time one of their properties free up.
Either way, just wildly saying that without any substantial evidence is pretty weak.
That last point - that housing is too expensive - is not something that airbnb causes or can fix. That's a supply side problem and the solution is housing construction. It may marginally exacerbate the symptom by providing liquidity.
Rentals have been a thing since people have been travelers. It's easy to point a finger at Airbnb, but a lack of affordable housing existed long before they were around. You could argue that hotels are using space that could be used for housing locals, too. Is Airbnb a factor in prices going up, yes. Is Airbnb the only factor, clearly no.
> 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?
If AirBnb truly made the market prices go up, then beyond short term shocks it's more of city hall's (and NIMBYism) fault that new supply couldn't come to market (such as rezoning) .
America has a massive zoning issue that is causing all kinds of pain and suffering to lower middle class and below.
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