Los Angeles is suing a landlord for evicting tenants to rent units on Airbnb
qz.com
qz.com
While Los Angeles County built the most out of any California county in the years between 1980 and 2010, it was waaaay less than it needed to keep housing prices from getting ridiculous. For comparison, in the same 30-year period, "the number of housing units in the typical U.S. metro grew by 54 percent, compared with 32 percent for the state's coastal metros. Home building was even slower in Los Angeles and San Francisco, where the housing stock grew by only around 20 percent."
We have the technologies to increase housing supply, but we've collectively made deploying them illegal.
And that's precisely what the city is doing. Housing permits are up around 40% YOY, about 70% of which are for multi-family units.
But that's not directly related to the purpose of rent control, which is not to keep housing throughout the city affordable, but to keep longtime residents--especially older individuals--from swiftly getting priced out of their particular community.
At any rate, I'm not sure how construction of new housing in Los Angeles has been "made illegal" as you suggest.
I encourage you to read the following:
http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign...
http://www.nytimes.com/2011/07/07/nyregion/more-apartments-a...
These are in now way restricted to New York either. This is happening in Shanghai, London, San Francisco etc.
Certainly there are many NIMBYs in LA, but the regulations in LA are not tilted as strongly against development as they are in SF. In the past years, there has been a lot of infill development in Hollywood (especially), mid-Wilshire, and around downtown. It has been encouraged by changes in zoning regulations that lift some parking and density rules, especially along transit corridors. These changes have been supported by two mayors now, and by most of the City Council. (One of the sued parties in the OP had units in mid-Wilshire, and another in Hollywood; the other two were in Venice.)
Here's a very selective overview of some new Hollywood projects: http://urbanize.la/post/hollywood-construction-binge-revisit... -- but the story is similar in many other neighborhoods.
The resulting density increases have caused considerable gnashing of teeth among older residents, who think of LA as a city of single family residences. There is going to be a proposition on the ballot soon, seeking restrictions on this development, and it's not clear where things will shake out (http://la.curbed.com/2016/1/21/10844688/los-angeles-anti-dev...). I don't see it passing, but it's too early to be sure.
It's also worth saying that it's often poor renters who are forced out by these changes -- their little three-story apartment building is torn down and replaced by a 6-story mixed-use building. That's the message the City Attorney is trying to get across to landlords.
I don't know that the word "think" really applies to such a blatant contradiction.
"from [ever] getting priced out of their particular
community."
How about the opposite argument: if you have a supply constraint with hotels, why not build more hotels rather than convert housing to quasi hotels that skirt taxes and impact housing supply?
My friend bought into a condo hotel a few years ago. Still a great model. Airbnb could easily move into that sort of model and outsource ownership, management, etc and follow the law. But I guess that doesn't apply to them.
You're not going to be all disrupty with that attitude.
The better supply side solution to increase available housing stock is to build more purpose built rental. This would eliminate the possibility of new rental supply turning into short term rental.
I mean, if SF ever hit "affordable" on a median family income, the population would probably be tens of millions.
Keep in mind that tearing down old housing and building new is not very cost efficient: you are paying for land, and the old structure (which you are tearing down), and the demo of the old structure. I live in LA, and my structure, which was built in the 70s, is still valued at more than the land it's built on.
Given current market prices? Absolutely.
Then airbnb prices decline or units go empty so listing on airbnb becomes unprofitable. Supply and demand is very real, it's not like some ideology that hasn't been demonstrated day in and day out. Please read up on an intro to econ!
"Build more housing" will tend to make developers very wealthy while doing relatively little to reduce rents or property prices, just like "build more roads" doesn't help traffic.
Just being in a "larger economy" may mean each person is burdened with more air pollution (e.g. China and India) and more crowded conditions than when the economy was smaller, while reducing access to various natural attractions (e.g. beaches, forests, open spaces).
Where are the economic models that take these sorts of economic costs to people into account?
I'm often surprised so many people are persuaded to embrace various policy positions by general statements to the effect of "studies say this increases GDP."
As in the old saying "War is much too important to be left up to the generals", it seems the economy is too important to be left up to the economists.
Maybe I should have elaborated more in my reply. My point was that I've heard that argument /a lot/ but I never hear alternatives or what I feel like is an honest discussion (maybe I'm just out of the loop). The scenario usually starts with, "a road is busy and citizens what something done about it." The obvious choice is to expand the road. This obvious response is, "that won't fix traffic." What I'm saying is there are other reasons to expand and I also haven't heard alternatives to expanding the road that are any more proven to work--which I'm genuinely curious about.
There are two goals that are in direct conflict in your scenario: one is 'keeping voters happy', the other is 'make efficient use of infrastructure, and minimize externalities of transport' (this goes for other issues as transport, for example water management, but let's keep it concrete for now). The 'solution' in your example is simple, from an engineering point of view: toll roads, congestion charges, smaller and more dispersed schools and healthcare facilities, denser residential development in fewer urban centers (=less sprawl), and a bunch of other, smaller measures.
Obviously this is impossible (no single administrative unit can do all or even several of those things), as well as too slow (we're talking 5-10 year implementation timelines, + another 5 or 10 for the effects to really set in). It's all about trade offs, and stopgap measures to keep things rolling in the mean time. I've been on all sides of this: informing the public about these things (haha good luck, even the 'average' citizen who has time to get involved in this is a raging lunatic, in my experience - let alone the real troublemakers), convincing policy makers to (also) look at the long term, infrastructure builders/maintainers who are essentially firefighting most of the time, ...
One of my former colleagues wrote his PhD thesis on the effect of remote working on transport demand; if you're really interested, email me and I'll see if I have a pdf somewhere.
(I've been working in this field for 15+ years, which is not to say that I know everything or even that that means that I'm right at all, but I've thought about this longer and harder and studied it more rigorously than 99.9999% of the population)
One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)
For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving).
Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.
That's a nifty opinion to have, I guess.
Are you saying that violations of the Ellis Act aren't really a problem -- and so cities shouldn't pursue Ellis Act enforcement cases, then?
If the market price is kept low enough through continuous supply, Ellis Act violations would be a non issue. There is a reason this isn't a big problem in unconstrained cities.
And I can just see the bus shelter ads they'll be putting up already -- and the side-splitting hilarity that will be sure to ensue, up and down the state. Remembering how swimmingly well AirBnB's efforts to "educate" local voters went down in a certain recent election.
The only thing that people want to preserve there is their property values. Constantly voting against new housing is just a "fuck you, I got mine and don't want to share" stance that is extremely close minded. It's basically a giant country club.
If SF really wanted to get rid of the homeless and crime they definitely could with some NIMBYism. They'd shut down all the low income housing and stop helping the disadvantaged and increase arrests.
Context: grew up in SF. don't live there anymore.. but i don't recent the changes to the city. Life moves on
>Most families in SF either have been there for decades or do in fact make 150k/yr. It's not being rich - it's just the local standard
Nope, most families have just been pushed out because it's hard to find a job that pays that much. If your policies are generally "screw the middle class", of course high income is the standard for the people that have managed to remain.
Also, claiming the massive income required relative to the rest of the country doesn't mean rich is ridiculous. That's like saying people who stay at the Four Seasons aren't rich because they all have to pay a lot per night.
For some reason, landlords want their cake and eat it too.
Thanks
All this results in a situation where the state with the biggest economy is constantly broke.
I'm not saying that any or all of this threatens what Airbnb is trying to do, and in fact I think such restrictions will make model better and more sustainable in the long run. Still, for a company that is, out of the necessity of their valuation, as bent on maintaining growth as Airbnb, the skies appear to be darkening.
Oh right, because putting "sued" and "airbnb" in the title equals clicks, despite Airbnb having jack shit to do with this case beyond being the unfortunate 3rd party.
And right in the article itself it says that even AirBnB stands opposed to the kind of illegal move these landlords made:
>"... we strongly oppose real estate speculators who illegally evict tenants and abuse platforms like ours in search of a quick buck,” Airbnb says in a statement.
This is such a non-problem it's ridiculous. The regulation to prevent this not only was proposed, not only was enacted, it's now being enforced by the city with damages likely to be awarded to the fouled renters. This is literally the best case scenario for one of these "grey area" startups causing some problems for regular people that has already been covered by proper regulation.
There's plenty of valid criticism to be made about Airbnb not properly vetting their users when they offer up properties, but enforcing rental/hotel law shouldn't be one of them. It's not Airbnb's problem, it's the landlord's, as we're now seeing.
The courts have to decide if that is legal or not.
If demand rises -- and it does, the population of LA is increasing by roughly 20,000 annually (from http://www.clrsearch.com/Los-Angeles-Demographics/CA/Populat...)
-- if 20,000 per year are added to LA's population, you need more rental units.
Here's a potential SAT question in the 'Logical Reasoning' part:
"A large city experiences 20,000 population growth per year. Because restaurants, doctors, barbers, dentists, and other service providers are not growing fast enough in the city to accommodate this large growth in citizens, should the city:
[A] Provide incentives for new restaurants, doctors, barbers, dentists, etc. to move into the city and start operating to meet the need?
[B] Or should the city impose caps/limits on the fees/charges of those restaurants, doctors, barbers, dentists, etc. who already operate in the city, which will create disincentives for new operators to move to the city to satisfy increasing demand?
Supply and Demand. The demand for EVERYTHING is affected by 20,000 new citizens in LA each year.
In 10 years there 100,000 to 200,000 more citizens in LA.
With the disincentives for new landlords to enter the LA market, there will be an even more severe shortage of units.
"Shortage of willing landlords."
The old adage is this:
"You cannot price-limit, and regulate, and tax your way to an over-supply of housing."
It's really, REALLY awful that city leaders don't understand that.
Guess which cities have the greatest shortage of landlords?
Los Angeles San Francisco New York City San Jose
(those are the U.S. cities with the longest period of landlord-reducing Rent control laws, by the way)
Can we PLEASE INCREASE THE FREAKING SUPPLY of willing landlords.
PLEASE.
$3500+ for a 1 bedroom apartment is just pyscho.
Of course you can - you just tax tenants not landlords. If you apply a $10,000 per month tax on every rental property paid by the tenant there would be an oversupply of rental housing even in SF.
The real question is should LA be growing by 20,000 people per year.
Government enforcing regulations asking a landlord that he can or cannot use his home for letting out to a person of his choice seems very regressive to me.
so I think they have a good legal argument and IAML.
Ah, the verb conjugation game, always fun:
- I dare. (or disrupt, usage varies.)
- You transgress.
- He abuses.
- He abuses
- They (real estate speculators) abuse.
Then you'll just need a few fiverr gigs a week and boom, you can rent a different, exciting new apartment every day!
A lot of other laws are violated and the city attorney (and law enforcement agencies in general) just ignore the violations. So this tells us a bit about prosecutorial discretion in LA at the current time.