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Comment by brandur | Hacker News Reader

Although (in typical San Francisco fashion) this implementation seems likely to be expensive and only moderately successful in the long run, is anyone else cautiously optimistic in the direction that many large cities are heading with respect to AirBnB use?

I for one have always enjoyed using the service, but am thoroughly convinced that allowing the rental of entire suites is having a considerable impact on local housing availability.

This is going on in San Francisco, but I don't think to quite the same extent as what was happening in Berlin. I made a trip there a year and a half back where I stayed at about five different AirBnB units over a three week period. It was quite obvious that every one of them without exception was "professional" in that they were reserved for use by AirBnB 100% percent of the year and oftentimes had paid clean up crews who were _not_ the owner. I did speak to one owner about it, and he said that he was now running this unit along with four others full time on AirBnB. In a world without this option, it's hard to believe that these wouldn't have been normal rental stock.

Recently the city passed Zweckentfremdungsverbot [1] to help counteract the effect. Nowadays AirBnB is still allowed, but only for single rooms in shared units. This strikes me as exactly the right balance.

[1] https://www.theguardian.com/technology/2016/may/01/berlin-au...

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In Seattle there are problems with building managers not renewing leases because, even with high/low seasons, they can make more money renting the same rooms as AirBNBs.

AirBNB is a great idea if you're renting out your space (and I've stayed at several like that; either where they're in the house with you or one guy in The Netherlands who just stayed with his girlfriend on the weekends he rented his place out). But of course, just like eBay, you'll get a mix of people just selling their stuff and people who make a business out of it; writing their own fulfilment and drop shipping software against the eBay APIs.

I really like this post referring to Uber/AirBNB/et. al. as the "bullshit sharing economy":

http://grist.org/politics/the-sharing-economy-is-bullsht-her...

So what if a lease isn't renewed. The tenant doesn't have a 'right' to a lease. If property managers don't want to renew leases because of AirBnB fine -- soon there'll be an oversupply of AirBnB and the market will reach equilibrium. However since places like San Fran put artificial constraints on supply through tight regulation, then the market can't reach equilibrium because of a government-created market distortion.

As a thought experiment, pretend that every home in San Fran was an AirBnB. What would happen? The demand would drop and landlords would then begin leasing their places out to where the AirBnB demand and the leasing demand was at equilibrium -- assuming San Fran allows new housing supplies to enter the market.

Why doesn't San Fran allow massive high rise apartments like in China or Korea? Because the NIMBYs want to protect their own property values. All of these regulations are anti-market and thus promote inefficiencies.

If we accept that there is a housing problem in San Fran, the solution isn't to tightly restrict the existing supply but to increase the supply. As it is now it's like two junkies negotiating over a plastic spoon.

Look, I'm a YIMBY but I think that cities need to keep AirBNB under control. Competition won't solve all housing problems, particularly if you throw residential housing and hotels into the same market, as AirBNB does.

Cities have every reason to incentivize people to actually live there -- and yes, most successful cities need a lot more space for people to actually live in. Any gains you could accomplish here are defeated when the new living space is set aside for visitors instead of residents.

Perhaps cities like SF and Portland should let owners of property build more housing on that property instead of further restricting their rights.

It's not an either/or situation. Yes, crowded cities need to take steps to increase the housing supply, but they should also make sure Airbnb isn't further diminishing the supply.

It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today.

> Building housing lowers house prices in the future

That's not strictly true -- if market participants pay attention to planned new starts, then the effect of additional supply should be seen immediately in today's prices.

In a city like SF, that's far from given. There's the discount rate of rent-in-hand today vs. when the construction completes, but more importantly there's a ton of uncertainty around projects. Planned new starts means very little in a city / region that regularly scraps or significantly delays projects due to random bureaucratic machinations.

You're right that information doesn't perfectly filter through and starts aren't a particularly reliable metric.

My intended point was very narrow though: your default assumption should be that changes in expectations of future cashflows have an immediate impact on price, unless you can point to a particular market friction that prevents this adjustment.

Basically, you should distinguish between timing of cash flows (which don't generally matter except for discounting), and the timing of the information flowing into the market (which does).

If there were a credible plan to build more much housing and the market believed in it, it should affect the price more or less immediately. Discount rates are very low -- $1 a year from now is more or less worth $1 today.

It also raises hotel prices.

> It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today.

That's not necessarily true. You assume that apartments that are used as full-time AirBnB rentals would instead be rented out to full-time tenants as "normal" apartments.

The problem is that if those apartments would be subject to rent control, a lot of landlords would prefer to keep them vacant. It's estimated that over ten thousand units in San Francisco are intentionally left vacant by their owners, because having a rent-controlled tenant in the unit makes it a lot harder to sell the property. Landlords who purchased their apartments for their appreciation value, rather than monthly cashflow, are pretty likely to do this.

If those landlords choose to leave their properties vacant, that will be a short-term reduction in the housing supply rather than an increase.

If those landlords choose sell their properties immediately, there is no telling what will happen -- some may be rented out, some may be converted into luxury apartments with smaller numbers of units, and some may be converted into single-family homes (yes, this really happens). Some may be bought by other landlords who intend to leave them vacant and flip them in a few years for a quick profit. Some may be torn down and replaced with larger buildings, which would result in a short-term decrease in supply in exchange for a long-term increase.

Of course, some landlords will rent out the apartments, which will result in a short-term increase in supply. But they won't all do that. I expect the effect on rents to be fairly small, and the effect on lawyers' bank accounts to be large.

Perhaps in areas where housing is in short supply holding a housing vacant should results in a rather punitive tax.

Agreed, but the open question is how to determine that a household is "vacant" (turns out it's harder than one imagines).

I'm a big fan of the: if it's not registered as your primary address in tax filing documents it's treated as an investment property and is taxed as such. If no one has that address as a primary address then it's treated as investment + vacant.

> Perhaps in areas where housing is in short supply holding a housing vacant should results in a rather punitive tax.

Sure, keep piling on the regulations. Eventually, there will be so many regulations that no sane person will want to be a landlord or housing developer.

Or, you could solve the problem properly by building enough housing. The constraints in SF are political, not geographical.

If you disincentive people to build or hoard housing for investment purposes people would still need homes and we have a workable plan whereby a bank provides capital to build and earns interest over the next 10-30 years to ensure people who need homes don't have to fork out 100k+ in costs to move in.

If we loosened up restrictions a lot of them could fork out even less for smaller homes even.

The purpose of the housing market is to you know house people not provide an optimal investment vehicle or money for entrepreneurs.

Taxing inefficiency in the market that is vacant or vacation homes is the smart thing to do.

"Should" they? What compensation do they offer owners in exchange for their popular political maneuvers?

Maybe they should exhaust other avenues of solution before taking away someone else's ownership rights?

Or you could just go with, "we know better, this is how we'll dispose of other people's property." This is the attitude that cost Clinton the election.

Your property isn't a hotel and you didn't expect it to be one when you bought it.

1. While you're waiting for the market to correct itself, people would be getting evicted. Even if they get an apartment back, there's little public good accomplished in the interim. (And, at least from a cold economic perspective, a serious loss to the rest of the economy while they figure out interim housing.) Most of the reason we don't have a pure free market is because it's worth capping how bad things can be if everything goes wrong, even if that has the effect of capping how good things can be if everything goes right.

2. The other reason we don't have a pure free market is because we want cities to be able to make themselves into the sort of city they want to be. This is fundamentally why zoning is legal and accepted: a property owner doesn't have the right to turn an office building into a residence, or a storefront into a factory, at their own discretion. San Francisco may not want to be a city of Airbnb residents and no locals. We might think they're wrong, but they get to choose that.

Note that it would be very easy to arrive at the same situation from a pure-free-market perspective: the US government, with its guns, owns all the land in the US. It delegates ownership of the land in SF to the City of SF, a corporation, under certain conditions. In turn, the City grants long-term leases to landlords under certain conditions. Tenants don't have a right to renew their short-term leases, but the City has the right to decide which landlords keep their long-term leases, and chooses to let tenants have the ability to expect their leases renewed. People freely and rationally choose to live in US land instead of land where they can actually own their property, because it's economically better for them. This is exactly what happens right now, modulo changes in terminology.

Of course there are those of us who believe SF zoning (and US zoning in general) is shooting itself in the foot. But that's ok, and the correct response is to vote with one's feet.

> Why doesn't San Fran allow massive high rise apartments like in China or Korea?

https://en.m.wikipedia.org/wiki/1906_San_Francisco_earthquak...

Capitalism doesn't require SFO to transform into Hong Kong. You can move anywhere. I live in a mid-size city where my housing costs are approximately the same as a San Francisco bathroom.

Personally, I despise the Bay Area fetishism because I'm 3000 miles away and my livlihood will be impacted significantly when an earthquake destroys hundreds of billions of property and those mortgages get vaporized.

    when an earthquake destroys hundreds of billions of property and those mortgages get vaporized.

A mortgage is house + land ("real property"), so an earthquake won't necessarily wipe out the value of the underlying asset. And, these days, due to the scarcity of land in the SFBA and high demand, the land under most homes could be worth more than the homes themselves! That said, however, if the quake were bad enough and infrastructure were ruined, that could also kill the demand and hence the land values.

Been to the Financial District? 30+ story towers are definitely possible, and their prevalence is increasing. Just not fast enough, and only in a few tiny corners where the neighbors don't stop them.

I really don't get why you'd deregulate housing/construction.

You don't allow free market to "balance itself" in industries with natural monopolies (e.g. utilities, cellular operators).

Beyond a certain distance, commuting to a city is impractical, so the space for residential development is limited (= there is a hard cap on how much stuff you can build).

The utilities are heavily regulated (for good reasons), why shouldn't the government start regulating the housing market on the same grounds?

Another thing to consider, there is nothing inherently "free market" about letting anyone build whatever they want, as long as it's on their land. Taxing, classifying and partitioning land by area covered is as arbitrary as taxing by window count[1] or house width[2]. Why not evaluate and sell vertical lots? Up from certain height, large areas are reserved for air traffic already, so there is a precedent.

It could look like this picture[3], the central beam would be regulated akin to roads today.

1 http://www.historyhouse.co.uk/articles/window_tax.html

http://www.colinsnotes.com/wp-content/uploads/2014/08/154-22...

2 https://mjwrightnz.wordpress.com/2012/10/28/amsterdams-taxin...

3 http://www.evolo.us/wp-content/uploads/2010/03/vertical-stre...

Regardless of the reason for the shortage its not going away tomorrow. The business owner doesn't have a right to operate a particular kind of business in a particular place and manner.

> In Seattle there are problems with building managers not renewing leases because, even with high/low seasons, they can make more money renting the same rooms as AirBNBs.

Do you have evidence to support this claim?

What percentage fall into that category, holding out for AirBNB type renting instead? Is there some threshold for it to be bad and worthy of some regulation? Do we apply the same rules to multiunit places as individual homes?

sorry, but that post you link to is pretty much a rant against wealth and accumulation of and anyone trying to get some apparently isn't allowed unless they share it. that kind of thinking launches no new businesses, instead its the type that results in regulations that prevent competition and innovation all under the guise of "fairness" and "for the children/environment/oppressed" etc.

We have already seen the results where governments tried to enforce fairness and equality by not rewarding competition and innovation. It wasn't pretty and it only works for so long before a generation or two passes and realizes the best days are past

What's innovative about owning land?

If there is already a significant shortage of housing it might not be in the peoples interest to allow a business model that encourages people to buy up existing stock and turn it into unregulated hotels.

You might argue that the real problem is the shortage of housing and even point to other causes but any solution to same might be years in coming if it comes at all.

In the meanwhile if its a significant negative to individual states/counties/cities I see no reason not to enforce existing or enact in fact new regulations to forbid it.

Surely those with access to significant capital can find other ways to profitably invest their money.

When I try to take a really broad view of it, I reason that people demand a place to sleep every night and so there's really no reason to think that airbnb and long-term housing are natural enemies. There's a limit to demand for bedrooms.

Apparently, there are shortages of both long-term housing and temporary places to stay. Partitioning the physical buildings into one or the other class does not help match supply to demand. Of course it can help move the shortage's effect between the two kinds of use, but that's only an issue to the extent that there are shortages for both kinds of use. Really we should fix the shortages, not just try to change the identity of the people who lose out.

When we look at AirBnB specifically, there are anecdotes about its negative effect on housing supply. I have also seen some quantitative/statistical evidence about it, and that shows that it has negligible effect on housing availability. AirBnB is just far too small to have a noticeable impact on housing supply in San Francisco (and the same goes for the handful of other cities whose stats I've seen). So even if you don't buy the theoretical argument about the effect of fragmenting resources on efficient allocation, from a practical point of view it quickly becomes obvious that AirBnB bans are not worthy of serious consideration as a solution to housing shortages.

So the most persuasive motivation for AirBnB bans are the arguments about noise, building security, and so forth. I don't personally find these arguments persuasive either but at least they are debatable.

Do you have a source for those figures? I ask because most of the, admittedly incredibly brief, research that I've done indicates that it does have a significant effect on housing.

[1] http://harvardlpr.com/wp-content/uploads/2016/02/10.1_10_Lee... [2] https://www.theguardian.com/us-news/2016/jun/27/airbnb-new-y...

I don't have a citation ready for SF; my recollection from the last anti-airbnb ballot campaign that a leading opponent of airbnb (Campos) claimed a figure between 1999 and 3000 units listed on airbnb. http://www.sfchronicle.com/airbnb-impact-san-francisco-2015/... claims the true figure is closer to 350 units. The higher estimate constitutes less than 0.8% of the 390000 unit supply, comparable to approving just one or two development projects [http://sf.curbed.com/building/1201/trinity-place]. The Chief Economist in SF estimated that a supply increase of 100000 units (at least 33 airbnbs) would be needed to have a significant impact on prices [http://archives.sfexaminer.com/sanfrancisco/leveling-sf-hous...].

Your [2] claims that 8000 units = 10% of the housing supply in NYC. I find this claim incredible.

Your [1] claims that more than 12% of housing units in the LA neighborhood of Venice Beach are airbnbs. Given that the average American gets 16 days of vacation per year [http://theweek.com/articles/463897/americas-war-vacation-by-...] I suppose we should expect about 5% of bedrooms to be allocated to short-term use. AirBnB's market share is less than 100% of those 5%. On the other hand, LA is relatively popular as a tourist destination so we should expect more airbnbs than Topeka KS. So that claim seems plausible to me. This report goes on to project from a model that these Venice Beach airbnbs, if returned to the long-term rental market, would lower prices by $67/month from $2680, a reduction of 2.5%. The same author notes that in recent years, prices rental prices have increased by 7.3% per year. It appears that the "solution" of banning AirBnB amounts to turning back the clock on the problem by just a few months.

You miss a huge issue in your analysis: Airbnb rentals are Second places to sleep every night, like hotels. They are vacation rentals. In other words, for almost every AirBnb bed, there is another bed elsehwere in the world lying empty. So people don't get to sleep in these beds otherwise. And this of course means that it's the less-well-off who suffer. And the benefits go to those who can throw their money around, to the detriment of basic human existence.

I've often wondered what would happen if AirBnb only allowed hosts to rent out their own primary residence. Or, perhaps primary residence plus one other unit.

This would alleviate the problem of hotels claiming hosts are a hotel. And it would make AirBnb better as the worst hosts are the ones that are managing multiple units.

Having large multi-unit hosts expands the inventory. But the whole point of using AirBnb is that you dont want to stay at a hotel.

There is a critical point where, if AirBnb allows total number of multi-unit hosts to pass, I suspect the whole thing will crumble. No one wants to wade through that mess to find the thing that AirBnb became so popular for-- normal individuals connecting to strike a deal.

This is already the case in several cities like NYC and SF:

https://www.airbnbaction.com/one-host-one-home-san-francisco... https://www.airbnbaction.com/one-host-one-home-new-york-city...

Even better, only let people own one residence to begin with. If they're not living in it, it's not theirs. That might solve the problem that there are more empty homes in the U.S. than actual homeless people...

How is adding more restrictions to using what you own a positive?

The problem isn't that units are being dedicated to AirBnB, it's that existing, everyday laws like sound restrictions aren't being enforced properly.

I'm not claiming an opinion one way or the other about whether this is the case in this situation, but it can be in your best interest to be prevented from doing something. It's easier to win a game of chicken if you remove your steering wheel. You don't get intimidated as often into voting a particular way if there's no way to prove how you voted. If you can effectively work for thirty hours straight, employers will want to demand that from you. And generally speaking, not being able to do something means that other agents won't try to pressure you into doing it.

In this case, it's something like "if you can have more money by AirBnBing out your place on weekends, then landlords can raise your rent by approximately that amount and since people now afford it, you've got no option other than accepting the rent increase and paying for it through AirBnB".

I agree that AirBnB removing housing stock can be a problem, but I don't think only shared units is the one right answer. For one thing, this seems hard to enforce. Instead of renting out a one-bedroom unit on AirBnB, you could instead get a 4-bedroom and rent the bedrooms individually (or to be fully above board get a full-time tenant for one room and rent out the other 3 on AirBnB).

And I'm not sure how I feel about the fact that this would kind of limit use to young, single, healthy people. People with disabilities or medical issues, families trips with kids plus grandparents, or even just older or more introverted people that don't want the hostel vibe may want or need more privacy than a shared unit.

The other thing that gets overlooked is the flexibility AirBnB provides in the gray area between living somewhere and visiting - one can book an airbnb for a few weeks, pick up and move to a new city with no belongings, and look for a job while deciding whether to move there for longer. Or find a place to live for a short internship. People are doing this anyway via sketchy craigslist sublets, but it's a lot safer (I'm just assuming in terms of physical safety, but certainly in terms of avoiding scams) on a platform like AirBnB.

Overall, I'm disappointed that cities are not at least looking at the popularity of AirBnB and, say, creating a new kind of zoning/licensing to officially allow some small percentage of AirBnB units, or allowing some hotel zoning & construction to be added to the fun residential neighborhoods where people want to live & stay. Or encouraging more subletting type rentals (every lease I've ever been on forbids it).

If they were doing anything at all to acknowledge that AirBnB is providing something that a lot of people really want and allowing some aspects of that to flourish, I could get more behind these regulations to limit unlicensed rentals.

Extended stay hotels for the kind of purposes you described already exist. They're essentially a small studio, with a kitchenette, are rented by the week, are larger than a normal hotel room, and have the personnel to ensure safety. The problem with zoning and having hotels in fun residential neighborhoods is that there often isn't the kind of civic infrastructure needed to support such things. Ability to ensure people adhere to noise ordinances, police officers, etc, are all issues that hotels have and need to be planned for.

> Extended stay hotels for the kind of purposes you described already exist.

'cept they are more expensive than airbnb. Zoning isn't going to help, because if said zoning either implies a tax, or some other disadvantage, then it'd get reflected in the cost.

Airbnb is ecking out efficiency, at some externality cost that's not borne by the participants of the transaction. Atm, i dont know what that externality is, but society should try to figure that out, and make sure it gets paid for.

>I for one have always enjoyed using the service, but am thoroughly convinced that allowing the rental of entire suites is having a considerable impact on local housing availability.

I believe short term accommodations affordability is just as important as long-term accommodations affordability.

Valuing one over the other is the common fallacy of assuming our own subjective valuation is more accurate than the market's.

Regulatory prohibitions are harmful in two additional ways:

* they fundemantally violate our human rights. Any voluntary interaction between consenting adults should be legal, particularly on their own private property. One can have their friend stay over, every day of the year, but as soon money (God forbid!) changes hands, it becomes illegal and punishable with income expropriation (fines)? The absurdity of the law is an indication of its injustice.

* they have collateral damage. For example an Airbnb licensing scheme will often make the difference between a person renting out their unit while they go on vacation for three weeks, and a person not bothering, even if the licensing scheme does not prohibit this. Complying with regulations is an extra cost, and it's a fixed cost that disproportionately affects the long tail of the most casual/occasional users. Regulatory prohibitions like this are one of the biggest drivers of the professionalization of the economy, which disempowers people in lower income groups.

If there is demand why not cater to it rather than legislate against it. I'm not a hardcore free-market ideologist but in this case we should let the market decide and adjust our zoning/development policies accordingly so no-one has to bear the full brunt of compromise. Airbnb is a vast improvement over hotels and opened up a new travel market. I have literally decided not to go on holiday rather than stay in a hotel that offers half the convenience, functionality and location at triple the price. This is something that is completely missing from the narrative.

I went to Bruxelles earlier this year with 5 other friends and I'm glad we were able to rent a whole flat for 3 days, we wouldn't have been able to do so by renting from professional. Altough we noticed that the place we were staying in was dedicated to being rented all the time.

Have you tried hostels? With a group of 5 you could probably get a dorm room to yourselves. I've stayed in over 30 hostels on various trips. Some are shit, but the majority of them were really nice and a lot of fun. You meet a lot of cool people and you don't overpay for a room you're just going to sleep in anyway.

Why not suggest a tent? A hostel isn't the same as renting an apartment. I for example have little kids so renting a hostel isn't as efficient as an option.

When I was a kid my family stayed in a hostel in Billund (where Legoland, Denmark is). We got a 4-bunk room to ourselves.

It's also a good chance to introduce your kids to the concept of a hostel and what's involved, so when they're older they will already be comfortable with heading out into the world.

I've done that. It's not that great...

In the UK, there's plenty of short-term lease companies and "aparthotels" which rent out entire flats, but have actually gained the necessary permission from local Government to do so. I assume there's similar companies elsewhere.

You're assuming Airbnb owners are all not 'legal.' I have a place in Provence that has three apartments we list in AirBnB and booking.com, etc. We pay tourist taxes and taxes on the business income. It's not fair or even accurate to assume that AirBnB listings are less legitimate than "Lease companies."

AirBnB is a distribution channel, not a business model.

> It's not fair or even accurate to assume that AirBnB listings are less legitimate than "Lease companies."

No, but unfortunately the majority are (at least where I am), and AirBnB has a vested interest in ensuring that they don't have to make sure their listings are legal, and their customers don't care.

The whole article this is based on is the city of SF forcing Airbnb hosts to register with the city and for Airbnb to validate registered hosts. It appears that Airbnb is explicitly attempting to aid illegitimate (ie. non-registered) listings.

So you were renting from a professional.

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