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Comment by trusche | Hacker News Reader

Here in Dublin, Ireland, rents are exploding, mostly because of a severe shortage in apartments, and it's a fair question to ask if AirBnB is partially to blame. From [1]:

> The average rental value of a two-bed apartment in the city centre at €2,000 per month, less a management fee, would equate to the apartment being occupied for just 120 nights of the year through Airbnb.

> Investors have confirmed that if correctly managed, the income can be double that of a long-term rental.

(AirBnB disagrees [2])

As much as I like the idea of AirBnB, their impact on the housing market in any given city needs to be considered. Unfortunately the article doesn't mention that at all, focussing solely on tourism.

[1] http://www.independent.ie/business/personal-finance/property... [2] http://www.irishtimes.com/news/social-affairs/airbnb-insists...

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I can't speak to Ireland, but here in the US, there's an extremely strong relationship between expensive apartments and a lack of new construction. Here's the graph:

http://www.spur.org/sites/default/files/wysiwyg/asking.price...

How difficult is it to build new housing in Dublin? Does the city allow new apartment buildings, or are most areas single family, detached residences only?

It's complicated. There are height limitations for residential buildings in the city (lower than those for commercial ones), and there's no culture of apartment living here comparable to other European capitals I know. Dublin is sprawling with single family homes. There's a debate going on right now about higher density zoning and the like, but it will take time. Regulations to improve building standards have added to cost, and most developers seem to be in it for the quick buck (my opinion only) and are holding back right now because that's no longer (or not yet again) an option after the crash.

http://www.irishtimes.com/business/economy/time-to-end-irela...

The market is clearly signaling that you've already run out of time.

The obvious solution to a severe shortage in apartments is to build more. Why doesn't Ireland do this?

Pigeonhole principle: if K people want to be in Ireland at any one time, and there are N < K apartments, K - N people will have a problem. All the folks criticizing AirBnB want to do is make sure they aren't the ones who face the problem.

Not quite - Airbnb shifts demand from traditional tourist accommodation like hotels and guest houses into standard domestic units.

I'm not arguing that this is necessarily bad, but it's really interesting to look at the reasons why this is happening and the negative effects it can have. Increasing domestic prices because of underutilisation is one.

The upside of AirBnB-like approaches is flexibility. Each person doing one or more rentals (of units that they don't usually live in) has low total capex, meaning expanding to serve increased demand is very quick compared to building a hotel. But it's obvious that this increases both volatility and prices on both the rental and housing markets.

I wouldn't be surprised if this becomes a problem and affected cities introduce heavy taxation on short-term renting out dwellings which you don't usually live in and which are not planned for commercial use.

OTOH, "semi-commercial" actors renting out apartments has existed for a lot longer than AirBnB. We stayed in one of these in Rome for a week in '09, found through some website for private rentals (AirBnB went international in '11). So it's not really a new thing, just a slicker UX which may or may not increase total demand for such services.

As I said: All the folks criticizing AirBnB want to do is make sure they aren't the ones who face the problem.

Tourists are people too, and need a place to live. The folks in Barcelona just want to make sure it's the tourists, rather than them, who suffer from the housing shortage.

Tourists before AirBnB would simply not visit somewhere if the hotel price was beyond what they could afford.

Is there any justification at all that could prioritise tourists over residents for living space?

Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do. Similar motivations cause cities to build office buildings without corresponding homes.

Empirically it seems like cities value tourists over residents -- if cities actually wanted residents, they'd approve construction of housing for them.

Tourism still incurs some costs, and a common solution to this is hotel taxes to pay for those costs. AirBNB dodges those taxes. Also, since AirBNB converts housing constructed for residents into tourist housing regardless of legality, it doesn't matter much which cities value more.

I assume that hotel/car rental/occupancy taxes are just an easy way to generate revenue for the government without affecting local voters. Is there any relation between hotel tax and government services consumed by hotel guests? I'd be surprised if there were.

I can't help but think this whole thing could be solved by charging hotel taxes on AirBNB room nights. Can someone explain why it's not that simple?

AirBnB does not share who's renting rooms. A significant share of the hosts use that to dodge taxes. Now AirBnB could collect and forward those taxes but well, they have no incentive to.

> Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do.

How does that work? Don't tourists use the same infrastructure?

Tourists don't usually use schools or social services. This page suggests those make up 50% of the budget:

http://gothamist.com/2013/04/11/interactive_chart_nycs_budge...

(I'm assuming "debt" and "pensions" are allocated proportionally.)

And in many cases they HAVE approved construction of housing for them but the new (very slight and only relative) market slack is being eaten up by commercial operators on Airbnb.

> to a severe shortage in apartments

You're looking at it wrong.

What AirBnB does is allow apartments to be rented as hotel rooms, at prices somewhere in-between.

Thus you get mostly empty hotels and lots of mostly empty apartments (1/3 or 1/4 use yields better money than full-time rent).

You've inverse-optimized resource usage.

This isn't purely a resource allocation problem. There are real people finding themselves homeless or in bad living conditions because of the explosion in rents in Dublin. Families shouldn't have to live in hotel rooms. We need to remember that the change and disruption that companies like AirBnB bring are not always good for society as a whole.

There is a supply and demand tension in Dublin over accommodation. Building more apartments, i.e. increasing supply, will help alleviate this tension. That doesn't mean we can't also tackle the problem from the other direction by reducing demand. AirBnB is demand.

It's hard to tell how much any government would want to pull on a lever that might reduce demand. Those tourists bring valuable outside revenue into the city. We need them too. There's lots to balance here. Let's not optimise just revenue.

Macroeconomics is more complicated than that. Basically the property market overheated and crashed in a big way less than a decade ago, with lingering industry-wide effects.[1] Additionally lots of crappy houses were built so they added a bunch of quality regulations that have driven up the cost.[2]

[1] http://www.reuters.com/article/ireland-economy-housing-idUSL...

[2] http://www.ft.com/cms/s/0/15bb4d40-4714-11e5-b3b2-1672f71080...

That first article says that the Irish government has introduced rent controls. Hardly surprising if there are controls over what people can charge that there is a lack of properties to rent?

It was actually the other way round. The very modest rent controls, hardly deserving that name, were introcuded after the lack of properties led to the rent explosion.

Fair enough, I was just curious how Dublin compares with here in Edinburgh which does have a focus on flats (at least here in the centre in the Old & New Towns) and which has had a lot of apartment development recently on brown field sites (former breweries, hospitals, docks etc.). Edinburgh also has vast amounts of visitors and students and I've never heard much grumbling.

The obvious solution is to understand how governments work. Residents are the voters, not the tourists. Blame the cities banning holiday rentals all day, in the end they are acting in the best interest of their citizens.

Apart from their citizens making a living through the platform. From my experience in Berlin they are acting in the best interests of the hotel lobby. The citizens were just a convenient foil.

The people it impacts negatively outnumber the people that benefit from it, it's as simple as that.

That is highly debatable. Berlin needs 40,000 new units a year, Airbnb accounted for 12,000 units. Airbnb is a convenient scapegoat.

More to the point: Airbnb shifts regular, tax paying renters into a grey market -- non-renting, non-tax paying economy.

If a city/country wants to base its rental units on a day-by-day, airbnb model, then fine. The problem is when airbnb comes into a regular market and "disrupts" that market by not paying hotel taxes or following local subletting laws.

I say that as someone who very recently used airbnb for a great deal in NYC, and was admonished by the host not to talk about our situation in the lobby, the elevators, or anywhere else someone might overhear.

Didn't they build many, many houses in Ireland before the crisis which then stood empty, debts unpaid and all?

Yes they did, but those are mostly outside of Dublin, many of them are unfinished and unfit to live in.

> Here in Dublin, Ireland, rents are exploding, mostly because of a severe shortage in apartments, and it's a fair question to ask if AirBnB is partially to blame

Perhaps we should see a pattern: The 'sharing economy' shifts power and wealth to those who own the assets, for which there is now greater demand and, due to resulting increased value, which are more costly to acquire.

Here in London its illegal to AirBnB more than 160 days a year, but its very difficult to enforce - I'm typing this a few metres away from the 365-day a year airbnb next door (after being woken by a visitor who buzzed the the wrong house).

> Here in Dublin, Ireland, rents are exploding, mostly because of a severe shortage in apartments[...]

How bad is the shortage? I'm asking because Google has once again contacted me, this time for a position in Dublin. Or do they have their own housing for employees?

It's getting pretty bad, and AFAIK, no they don't. You'll find a place with a Google salary I'm sure, but it won't be cheap. Feel free to contact me if you want some advice.

Ten years ago, I never dreamed that more efficient resource utilization would be demonized.

Any change in the housing market it bad for someone. Rents going down can cause owners to lose their homes. Rents going up upsets people who want the security of living in the same place but are't willing to pay for that luxury by buying their own house.

More interesting is what the long term picture would look like if the AirBnB is left to carry on unimpeded. Whatever it is will surely be better for people in general. It might hurt some people who feel entitled and got caught by surprise, but that's how progress works. There are usually losers along with people overall being winners.

Not just those who aren't willing to pay - many (like me) aren't able to pay yet.

People who can't afford it shouldn't expect it to just be given to them. I spent a long time not being able to afford a house and when I couldn't afford rents, I simply moved elsewhere. I never imagined blaming some nebulous group for that inconvenience. It's just part of life.

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