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Comment by reza_n | Hacker News Reader

It converts long term housing stock into short term housing, which benefits tourists with cheaper prices and increases the price for residents since both are competing for the same units. Basically, tourists are getting a free ride on the backs of residents. Its always been the other way around, tourists pay extra taxes and fees which go back to the city (and residents) and entrepreneurs build hotels which once again benefit the city (and residents). Can't think of many arguments where tourists should be given cheaper housing rights over residents.

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The economic response to this (and I'm not saying I agree...I don't have a horse in this race either way) is that a tourist's willingness to pay for accommodation exceeds a resident's, and so they should get the apartment. And the apartment owner can turn around and capture this surplus by renting out their accommodations to tourists on AirBnB. The market price for housing is artificially low in most municipalities because the market is limited to people within geographical range of the apartment; open that market up globally and you'll find a vacationer who values it more than any resident does, and so the resident can capture the surplus to renting it to the vacationer.

The neat property of this business model is that it's actually viral: the way to avoid getting screwed by AirBnBers next door is to rent your place out on AirBnB too, and then go stay in somebody else's AirBnB.

It can be interesting to try and consider the endgame of various startups' business models, basically what the world would look like if the economic inefficiency they exploit is arbitraged away entirely. YCombinator is a world where everyone is an entrepreneur, but the returns to entrepreneurship aren't much better than having a regular job, and everybody works much harder. Google is "information wants to be free", where everybody has full access to information and the market price of that is zero. Napster was that nobody would produce art or music; Facebook is that all socializing occurs online; Uber/DoorDash/PostMates and other sharing economy startups create a caste society where those without technical skills serve those who do. AirBnB's endgame is the destruction of the concept of residency. If they succeed in their mission and arbitrage away all inefficiencies in the housing market, they effectively institutionalize the digital nomad lifestyle, where everybody can live and work anywhere in the globe, and yet never has a permanent home.

I'll let other people judge whether that's a good or bad thing. To me, most social institutions are pretty arbitrary anyway, and I have confidence I could adapt to whatever world comes next. I'll say that they're riding a really powerful trend that's independent of any one corporation or individual: the Internet has made nearly all markets global, and so the idea of being tied to a particular place is becoming increasingly quaint for many people.

A society where only a select few own property? I believe Europe tried that for 100's of years. I doubt you'd find many people willing to go back to serfdom.

I didn't say that - AirBnB's model is agnostic about who actually owns the property, since as far as the platform is concerned, you can AirBnB out a property that you're renting. (The landlord might not like it, but that's for you and the landlord to work out.) Many people are both hosts and guests on AirBnB: they own one or a few properties that they rent out for income, and they use the income to live where they really want to live, in other people's AirBnBs.

The idea of mainstream property ownership is dying in America for different reasons, notably easy access to credit and poor financial education of the masses.

What AirBnB offers is a decoupling of "location" and "residency". The post-war dream was the idea that you'd put down roots at the place where you are physically located: you would think of yourself as a resident and a citizen of the municipality and nation whose borders encompassed your home, you would have a home that you would live in for many years and make improvements to for the long term, and you'd put down deep social ties with the people closest to you. The post-millenial dream, for many people, is that you would live anywhere that strikes your fancy, you would meet lots of interesting strangers who would become your friends, and you would have a lot of interesting experiences rather than just the same monotonous daily life. AirBnB is tapping into the post-millenial dream; they don't exist in a vacuum, they exist because a large number of people actually want the world to be that way.

There is this thing called a stock market.

And? You'll have to elaborate.

Land is not the only kind of investment property anymore, and can be bought by companies that trade on the stock market.

Also nomadic societies haven't faired too well either.

That's not the full economic response. The tourist pays tax for n days a year. The resident does so as well as additional taxes which make the whole city possible.

How have we gotten this so backwards?

In a sense, both the host and the guest pay "tax" to AirBnB, in the form of service fees. These fees are then used to provide many of the services that governments have traditionally provided - regulation of commerce, payment processing, dispute resolution, insurance against bad events.

I'd agree that we need some sort of theory of checks & balances for these new global corporate actors. People seem to have reacted to the dysfunction of governments by creating new quasi-governmental actors, but without realizing they've done so.

Most of the population is in the bucket that will be harmed by high housing prices, won't ever be able to derive any benefit from owning additional housing for rent, and will only occasionally if at all benefit from cheaper vacation rentals.

The people who will benefit most are the top 10% will will ultimately own most everything and can afford the hotel fare.

In short, screw them.

Indeed interesting to think about the end game. Let's suppose the Airbnb's end game is desirable for the society. But the process of getting there means a lot of people who love their home have to move away because the location is highly desirable for tourists. Is that fair to these people? If not, maybe we should aim for a different end game.

Here we run up against the fact that the world is a far more cruel place than most people would like to admit. Is it fair to these people? No. Do I like it? No. Is it going to happen anyway? Probably.

It's worth remembering the history of people who love their home but had to move away because some other people loved it more. Those folks who are so attached to the downtown apartments they can't afford anymore? Their neighborhoods became desirable because of a variety of urban renewal projects that largely worked by eminent-domaining & bulldozing lots of poor, mostly black neighborhoods. The original inhabitants - who after the Civil Rights movement were actually excited that they might be treated as first-class citizens - had their communities eviscerated, and still haven't recovered.

And then if you go back further, all of America is founded on the genocide and conquest of the Native Americans, many of whom loved their home and had to move away because the location was highly desirable for settlers.

And if you go back further, many of those tribes themselves stole territory from other more peaceful tribes. The Comanche and Aztecs, for example, practiced slavery and human sacrifice for rival tribes captured in warfare.

You could look at this as part of a long chain of humans kicking out other humans whose lands they covet. In the grand scheme of things, it's actually rather polite, as the original owners are being paid for the use of their properties and aren't even giving them up.

>"The economic response to this (and I'm not saying I agree...I don't have a horse in this race either way) is that a tourist's willingness to pay for accommodation exceeds a resident's, and so they should get the apartment.

This in my opinion encapsulates exactly what is wrong with evaluating a complex issue like housing in purely transactional terms. Do cities and their residents have no responsibility to each other beyond "capturing a surplus"?

Certainly what makes their neighborhood interesting and by extension desirable in the first place wasn't the product of purse economics was it? A hotel district where guests stay in apartments formerly occupied by residents doesn't sound like a very interesting or inspiring place.

If a neighborhood catered only to tourists and Airbnb visitors it would slowly turn into Times Square (NY) or Union Square (SF). This would not be a stationary equilibrium.

This is spot on. Also having a hotel next door is easy to spot when you are looking for a new place.

I think Airbnb is a good idea with regulation that limits the number of weeks you can rent out your place.

I believe this is how it works in SF already, something like one can host up to 90 days per year with them not present. I don't think there's a limit if they are present.

I remember NY housing prices were not so friendly way before Airbnb. In fact, a number of sitcoms set in New York feature the topic prominently. Is there any data that Airbnb made the problem substantially worse?

Housing is a disaster in every major city and price have been going up almost 10% a year for a while. AirBnb hardly has any influence on that.

Montreal is amazing, actually.

Thanks, universally-slandered rent-control! Living in this city makes me realize how cargo-culty a lot of HN economics is.

A lot of cities have or had rent control, usually with disastrous results. What makes Montreal different (non-rhetorical question)?

idk, I don't study the topic in-depth.

However, I live here, and it's incredible. Every time some economist (or, worse, economics enthusiast) makes a ludicrous claim like "rent control is objectively and universally agreed upon to be bad" I just laugh. Montreal routinely ranks as one of the best cities in the planet (and I agree with that assessment), so clearly it's not as black-and-white as it's made seem.

The big problem here is really market distortions caused by zoning: https://news.ycombinator.com/item?id=14942019

Exactly. And to further your point (in case it's not clear) tenants renting out on airbnb allows landlords to increase rent at the inconvenience of the tenant. So if a landlord allows this and the tenant gets extra income part of that extra income is passed on to the landlord as extra rent or the tenant finds a rent increase acceptable if they are able to rent out their unit.

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