I guess we still have some buffer room as most people still have some disposable income that doesn't go to rent, but when that cap is hit, then what?
This has always been the case in mountain towns. The article is more doom and gloom than anything. I spent my early teen and twenties ski bumming around the exact towns mentioned (Crested Butte, among others) years before AirBnB existed. It has always been a lifestyle of poverty couch surfing and floor camping. The dichotomy of extreme rich and poor has existed in these towns like nowhere else in the US for as long as skiing has been an upper class pursuit. Those who wish to make their lives in these towns know this and value the lifestyle above all, so they adapt. The ones who don't move to Denver.
You know, there are pretty simple and century-old technologies that let us build more units of housing on a given piece of land. The problem is that we choose not to use them: https://object.cato.org/sites/cato.org/files/serials/files/r.... Or see http://www.slate.com/articles/news_and_politics/politics/201... for a broader view.
Housing doesn't intrinsically need to get more expensive. But if we make it impossible or difficult to increase the supply, we're going to see prices rise. This isn't really about money "floating to the top;" it's about legal and regulatory problems.
But for addressing your concern this is good news: "before people either do or don't come up with a consensus on what society and growth should look like."
Unless there is a dramatic shift in policies to allow MASS immigration or everyone starts breeding like rabbits in the USA, we do not really have a problem here where our urban spaces will develop into unpleasent places. In fact it's actually the underinvestment in our urban spaces that precisely creates many of the issues people connect to cities.
Cities and states need to address the supply and infrastructure problem to allow people to live affordably, with a good standard of living, in the places that they want to live.
And since that topic is associated with race, good luck having an objective discussion in a Western country. In Canada, if you even suggest there is a discussion worth having, a huge percentage of the population will immediately assume you are a Trump supporting racist. More subtler topics like the obvious fact that some segments of immigrants are not contributing to the economy via income taxes while massively increasing housing demand are completely beyond discussion.
http://www.slate.com/articles/news_and_politics/politics/201...
"Or take immigration policy: Dean Baker of the liberal Center for Economic and Policy Research has called for increasing the number of doctors, dentists, and other professionals allowed into the U.S. while limiting the number of less-skilled people, like would-be retail clerks, custodians, and housekeepers. The reason is that high-skilled immigrants squeeze the wages of upper-middle-class professionals, who can afford to take a hit while lowering the cost of various services for poorer people by giving them the option of going to cheaper doctors and dentists. By contrast, bringing in retail clerks, custodians, and housekeepers makes life cheaper for the upper-middle-class professionals while squeezing the wages of working people, particularly immigrants who already live in the U.S. Want to guess how popular the idea of increasing the wages of nannies is with the upper-middle-class people who employ them? I’d love to know, but I’m sorry to report that upper-middle-class pollsters have yet to ask the question."
It is a really good article, I encourage everyone to read it.
I said "demand can only be controlled through restriction on immigration...". For example, if the Bay Area wants to control demand to keep house prices lower, it has no ability to that because it does not have a border. It cannot stop people moving there. Only the federal government can do that at a national level by controlling how many people can cross the border to immigrate. And as a second matter influence birth rates through public health programs (but birth rates aren't a problem in the USA).
> The US currently had supply and demand issues amongst it's growing and declining cities.
Yes, but cities and states cannot control demand. They can only control supply.
Agree with your first sentence, but I quibble with this part. Demand for real estate is local, and defined as something resembling density: it's an intensity distributed over some area. That area is limited by development and infrastructure.
For example, you can alleviate the intensity of demand by widening the area in which those consumers can be satisfied. In other words, build more transportation that makes it more palatable to live further afield. The article even mentions it specifically: running the commuter shuttle to Gunnison more frequently eases the pain of living there and working in Crested Butte.
I don't think anyone disputes that the vast majority of growth in the economy has gone mostly to the top 20%, how can that not affect the other 80%'s ability to purchase a home?
And at least in much of Canada, it is the price of the underlying land that is going up, if land gets zoned for a multistory skyscraper, the land value immediately adjusts to consume the majority of the "value" created from rezoning.
Millennials are having to spend an increasingly large percentage of their money on housing, a much higher percentage than prior generations, especially on a $/sqft basis (if you want a place where there are jobs). And this is on top of the massive student loans needed just to get any kind of job > minimum wage.
EDIT: Just finished that 2nd article, it is an absolutely brilliant overview of the hypocrisy of well to do "Liberals" that absolutely infuriates me. Thanks for the link.
http://www.slate.com/articles/news_and_politics/politics/201...
"Where are people supposed to go when even the middle class is homeless?"
They can go to places that aren't mountain towns. EDIT: or they can build new mountain towns. There is no shortage of mountains.
Supply grows to meet demand, but what if the demand side has no money left? I think a lot of these "timeless" rules of thumb are going to be discovered to be not so timeless after all.
In any case, this is completely unrelated to housing usage patterns.
It says that centuries of real wage increases an effect of automation.
I'm sure it's entirely different this time though.
What about the median wage?
> which shifts the demand curve for labour to the right, causing wages to increases
Are you suggesting automation has resulted in most of the new wealth being broadly distributed to workers rather than concentrated in the top 10%?
[1] http://www.csmonitor.com/World/2016/0207/Progress-in-the-glo...
[2] https://www.minneapolisfed.org/publications/the-region/where...
[3] https://www.brookings.edu/opinions/sources-of-real-wage-stag...
[4] https://www.brookings.edu/research/make-elites-compete-why-t...
2) Wage growth ignores the unemployed.
3) Ignores unemployment. "Most importantly, the growth in the average real wage is largely determined by improvements in labor productivity, output per worker hour."
4) Partially true (I very much agree with the protectionist immigration point), but there are many issues with that article as well.
With current wave of automation, unskilled jobs are being destroyed, and specialized jobs are being created. The people leaving the former can't access the latter.
Of course it is. Which is obvious if you look at how automation before differs from automation today.
And I'm going over the obvious memes now, but:
> Replace the word automation with: horseless carriage
Yes, and replace the word "human" with horse", and tell me the invention did not have a dramatic impact on the population that was doing the work.
Humans are incomparable to horses. Horses cannot buy automobiles. They do not have property rights, or the capability to utilize them.
Clearly you've never been to San Francisco.
Often they are bordered by Federally or state owned land, and have limited supplies of water due to the simple fact that they are on top of a mountain and there is only so much water in the natural aquifers.
Building taller buildings and using water more efficiently will only get you so far...
To phrase it more glibly: "Necessity is the mother of invention."
Rents businesses essentially "short circuit" the flow of capital through the economy. So a "one percenter"[1] buys a cabin which he rents through AirBnB to other "one percenters". Because he isn't a hospitality business he doesn't hire desk staff, a concierge, or pay taxes that are funding local government efforts. Instead the 'rents' just recirculate right back into the "one percenter" pool.
The absurd extreme of this notion is something like the vision in Elysium of a rich people enclave with no need of any human "non rich" staff.
I don't see that actually coming to pass but as Gates and others have noted, it is important to understand how technology can distort an economy and work on ways to repair that distortion.
[1] In quotes because it is a stand end for 'top n% where n << 50'
A: A developer is someone who wants to build a cabin in the woods; an environmentalist is someone who already has one.
If you're talking more like a 20%er, then they are either doing the same thing, or they live locally so even though they're not hiring a maid/handy-man, money is going from the 1%er to a person living in the local economy (themselves).
Assume the cabin exists. It can be owned by someone who lives in it, or someone who really just rents it. In either scenario property taxes are going to be paid. And in either scenario the cabin will be maintained by local service agencies (plumbers, electricians, etc).
The only difference might be that the 1%er is paying a laundry and maid service, and a local to pick up and give out the keys to the place.
There is no special "business property tax" for AirBnB/VRBO type rentals and according to Fresno many VRBO/AirBnB types don't actually report their income (this annoys the state equalization board), and according to the Sunnyvale city manager people who rent out rooms or their houses should have a business license but they generally don't and it is hard to enforce.
My suggestion was that if you differentiated between a VRBO/AirBnB place and a bonafide hospitality business, like a Bed and Breakfast, there is both significant additional tax revenues and additional documented employment.
If a person isn't reporting their income, that's a federal crime, and we have enforcement mechanisms for that. They might be lagging a bit, but if there's anything the government is fairly good at, it's making sure you're paying income tax.
In what way is a bonafide Bed and Breakfast going to result in additional documented employment? All of the bonafide BnBs I've stayed at were completely run and maintained by the home owners.
Nowhere that I've lived has had this. Not that I've ever lived in the US.
There's no extra property tax, but most places require sales tax to be paid on all short term rentals and many charge lodging tax on top of that.
In my case in Virgina, I pay 10.3% combined sales and lodging tax on every dollar of rent.
There is also much more wear and tear on a vacation rental than a long term property, so it's not just increased business for local maids but all construction trades, local handymen etc.
That is a good point, it is no doubt especially true for transient renters versus someone who is renting a place to live in full time.
I see why some people would not welcome growth but nobody owes you a lifetime guarantee on living in a desirable place for a low amount. It's real estate and has always been subject to change, many times severe fluctuation.
As someone who pays my taxes it is very annoying to have another body step in and muck it all up. AirBnb is notorious for collecting the wrong taxes and poorly reporting the taxes they do collect.
But the reality is that the resorts make their profits off a tiny percentage of the clientele. The middle class family who stays in a budget hotel, buys season passes, and brings their own food, ends up being a net loss for the company.
Practically all the money is made on the full price daily ticket sales, expensive marked up restaurants, and high end real estate sales/rentals. Without the rich people who blow $20k on a week of skiing once a year, the industry as we know it simply would not exist.
And many of these are people who live in day-trip distance of ski areas rather than renting or owning second homes, so the proportion in that market is even lower.