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Comment by dragonwriter | Hacker News Reader

The odd thing is that AirBnB’s entire value proposition to hosts is that it increases realizable income from the property they control and make available through AirBnB; if true, especially in the presence of supply constraints, this has to increase market clearing prices.

They are in a position where what they need hosts to believe is directly at odds with what they want policymakers (including people voting directly on policy or for politicians) to believe.

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The spin is preposterous. They should just say that that's a natural outcome of better real estate utilization and that the city needs to figure out how to build more affordable housing.

Easy there with terms like “better real estate utilization”, which could be conflated with “more efficient rent seeking at the expense of housing consumers”.

The end goal is not always maximum profit extraction. NYC is served best by balancing the needs of both long term and short term renters, while ensuring investors reasonable compensation/rates of return on capital invested for services provided.

That's fair.

This is not what people traditionally think of as "rent-seeking." Rent-seeking behavior is doing something to get more money without providing any corresponding value. AirBnb hosts do provide value -- just not to the people who live in the neighborhood. But it is fine to argue that, based on their willingness to pay more, out of town visitors provide better utilization of the housing resource.

TL;DR: Extracting rents from things you own by providing economic value to a customer is not "rent-seeking."

Exactly. Banning people from renting out their place on Airbnb is actually what's rent-seeking.

It means you get to enjoy lower rent, but at the expense of the unit's full economic potential being utilized.

In economic terms, if a unit can fetch a higher rent being rented short term, then it provides more economic value as a short term rental, and laws preventing that reduce economic utility.

Short-term, <90 day accomodations are not "housing", and never have been considered as such. That's why they're in a completely different regulatory category and always have been.

In a democracy it makes sense that a city would prioritize the needs of the citizens who live and vote there over short-termers and people looking to make a quick buck.

I'm not commenting on the validity of the policy, only one whether rent-seeking is the correct term to describe lending one's property out on AirBnb.

Extracting rents from things you own is literally "rent-seeking". It's the definition of "rent-seeking".

You can argue the pros and cons or rent-seeking or of Airbnb, but "rent-seeking" clearly covers Airbnb.

No, that is not the definition of rent seeking. The definition of rent seeking is:

"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth."

An example of rent-seeking would be lobbying against the construction of new housing to inflate the value of one's own home. A non-example of rent-seeking would be renting your house out to someone else. More from Wikipedia/economics 101:

"Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions . . ." such as a transaction between a property owner and someone seeking to rent that property for temporary use.

There's more than one definition of the term. I do agree that the definition and examples you are using are common.

"In economics and in public-choice theory, rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth." - Wikipedia

I would say that applies to making a profit off of property one owns by charging people to use it.

All passive investing is rent seeking under that interpretation of that sentence.

I would consider all passive investing rent seeking. Or at the very least a kind of rent.

Just a quote from an article that sort of illustrates the attitude I have towards it:

> One disturbing implication of Thomas Piketty’s new book, Capital, is that the American economy is slipping into a form of “rentier” capitalism, in which passive income from wealth, increasingly in the form of inherited fortunes, is supplanting dynamism, hard work and innovation. - https://qz.com/196575/to-get-rich-forget-entrepreneurship-an...

Apparently I'm not the only person with this attitude, although this poster was down-voted: https://news.ycombinator.com/item?id=13151809

There's also some links there. I do use passive investing, but I do consider it a kind of rent and I think society might be better off with less of it.

The Landlord Rental Complex dictates that non-rental properties will be bought and turned into rentals, and they will constantly test increases in price - putting a constant negative pressure on the quality of life of everyone else; this leads to urban sprawl as well, passing a time cost over to people who need to travel further distances. E.g. Building more affordable housing isn't really as deep as the conversation needs to go.

So I have never seen anyone address the flip side of why there is a shortage of hotel space (hence airBNB).

The reality of the situation is that hotels make terrible neighbors, particularly terrible hallway neighbors. Most people do not want to live next to temporary accommodations, and if they were going to they would rather have a separate building designated for the purpose. It is completely valid for a city to be in favor of its citizens, and not for a few short-term visitors and someone looking to make a quick buck on their apartment.

I think they mean that a room that is unused and not on the market can help you get extra income

Yes, but it will also increase occupants and the experience of occupants.

If you put a fancy restaurant that sells gourmet popcorn, you raise the price of popcorn in general, and you can also increase the amount of people that eat popcorn.

I don't think it's relevant to compare popcorn to positional goods like housing.

What would be the difference

They are radically different. Corn is the textbook example of a commodity while land is the textbook example of a positional good.

You could sell any realistic amount of gourmet popcorn without affecting the supply of corn nor the price of other popcorn products, while selling housing affects the supply of land and the desirability of that housing stock.

> Yes, but it will also increase occupants

It will increase mobility of occupants, but it probably won't increase occupants (which is equivalent to decreasing homelessness) much, though the decrease in short-term rental pricing could reduce transitional homelessness (but the increase in long-term residential prices could also increase the more durable kind of homelessness)

> increase occupants (which is equivalent to decreasing homelessness)

I will not increase permanent local occupants, it will increase number of occupants in general. Thats because airbnb's are out of towners using under-utilized housing stock.

Airbnb's increase homelessness, but its not about market efficiency, its about use of land. Any office building will also increase homelessness.

I ponder, are there more rooms getting listed that weren’t before (increasing supply and dropping price) or are existing rooms on the market becoming more marketable (increasing price directly with a fixed supply as you suggest). “Both” yes but ponder more with me

I ponder I ponder

I bet it depends on the city

> I ponder, are there more rooms getting listed that weren’t before

Certainly, for short-term rentals.

Not for residential, long-term habitation. AirBnB drives long-term and short-term rental prices closer together, which is good for travellers and bad for non-travellers.

Likewise, something to wonder, is many reviews will - at least in the past - would reference that they never met the "owner" of the listing. I know some cities are trying to crack down on this, however how hard is it to setup a company that has a structure where a real person gets listed as owner (and perhaps gets paid $100 a month for using their identity) and the company manages everything, acting as "real person?"

>if true, especially in the presence of supply constraints, this has to increase market clearing prices.

AirBnB arguably increases supply of people in beds through more efficient utilization.

> AirBnB arguably increases supply of people in beds through more efficient utilization.

That's not supply (which is a measure of what is on offer to be sold), it's market clearing quantity. And, yes, AirBnB increases the supply and market clearing quantity (and decreases average price) of short-term occupancy by transferring units already purchased or rented in the long-term market to be rented the short-term market (which drives up demand and market clearing price in the long-term market.)

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