I would like to know if you think the problem is AirBnB or the lack of building new houses. I find a lot of people who complain AirBnB drives up rent, but also believe building more units won't push down rents.
Airbnb changes the demand curve by letting residential zoned property be commercial short term rentals. It also doubles down by undermining actual hotels.
So you can react by saying just more houses. And I can react by saying “don’t do Airbnb, which is often illegal anyway.” We’re both right.
Capital shouldn’t have higher preference over citizens.
Most cities would like to keep their growth in check somehow so they have the appropriate infrastructure ready for it. Things that distort that (AirBNB, Chinese speculators, etc...) throw all of that off.
House prices are not growth, and they generate the tax revenue that you say helps get the infrastructure ready.
With housing, the induced demand is mediated by housing prices. More housing lowers prices, which attracts more demand, which raises prices. But it's not going to raise prices above where they would have been had no new housing been built. (If prices were higher in the more housing scenario, what's stopping the person who moved to the city at those higher prices from moving in the less housing scenario?)
It sounds like you are claiming that it is impossible to out build housing demand. This cannot be true. There is a finite population of people that want to live in any one place.
The NY Metro area is the definitive example of what you are talking about. Every lane of highway or bridge built increased traffic because it enabled someone to get the house they wanted cheaper somewhere else.
Now, construction costs are too high and land is in tight supply. The result? Infill of formerly blighted areas (aka gentrification).
Also there are cities where housing prices have stayed in check, and generally they have done it by building more supply. Here is a ink to a graph that show the difference between Dallas and Atlanta and San Francisco ( https://fred.stlouisfed.org/graph/?g=oe8E ). For reference Atlata had over twice as many new units constructed per year as San Francisco with half the population. This is why I say denying the supply side fix is dishonest. There is no reasonable measure where what you claim about supply attracting demand is true.
Dallas and Atlanta are nit great examples, as they basically have unlimited land to expand on.
It won't:
> Building enough housing to roll back prices to the "good old days" is probably not realistic, because the necessary construction rates were never achieved even when planning and zoning were considerably less restrictive than they are now. Building enough to compensate for the growing economy is a somewhat more realistic goal and would keep things from getting worse.
https://experimental-geography.blogspot.com/2016/05/employme...
Unless we do something dramatic and Bucky Fuller-istic like...
https://www.berkeleyside.com/2018/08/02/prefab-housing-compl...
> If the (first) model is correct, it would take a 53% increase in the housing supply (200,000 new units) ... to cut prices by two thirds
There is no reason you couldn't build that many new units over a ten year period. In fact if San Francisco increased its construction to match D.C. it would have that many new units in less then a decade
edit: Just to clarify, the only limitation is political. People don't want to allow the construction required and would rather pass protectionist laws that effectively lead to the Housing and Homeless crisis you see in SF and LA. In so much that you can convince Rich San Franciscans that those poor people they keep saying they care about should be able to have a reasonable path to getting housing you could fix it in less then a decade
One the one hand, I grew up in SF and it's been hard coming to terms with the idea that I'll never be able to own my own home here. At this point I'm just glad that there's still (relatively) cheap land in the eastern part of the state.
One the other hand, I don't want the city I love to be changed for the worse by rampant growth with the admixture of profit-driven decision-making to make the situation even more complicated. I've already got the futureshock[0], I don't think more-of-the-same accelerated 10x would result in a great place to live.
One the gripping hand, I'd love to renovate the mega-structure of the Bay Area, clear off and revitalize the old creeks and replace the lost housing with arcologies[1].
The city has changed and its a hellscape. No one can live there unless they bought their house in the early 90's or before. Teachers, Police, Firefighters, and every other kind of public servant is paid below the poverty line for the city they are supposed to serve. Low income people are forced further and further out, and entire economic sectors are starting to experience people insolvency. The city is being slowly turned into a monoculture of tech workers, and office buildings. The only thing the people of the city can bring themselves to do is try to legislate ever more controls on change and try to keep the city in some sort of 80's time warp. However they just banned selling e-cigarettes, and passed a law making sure the government doesn't use facial recognition software so I guess they don't feel the crisis of homelessness or high rents is something that should be given their attention.
I am assuming that for the sake of discussion. Part of the reason I link to that article is because the author seems to me to be data-driven and careful about how much you can accurately predict from the data he collected and analyzed.
> people don't want the city to change.
I can't speak for everyone, but for me it's not about preserving the city in amber, I don't want it to become like Manhattan or Tokyo. Like I said above, I want to make cool high-tech arcologies and revitalize the ecology of the Bay.
> The city has changed and its a hellscape. No one can live there unless they bought their house in the early 90's or before. Teachers, Police, Firefighters, and every other kind of public servant is paid below the poverty line for the city they are supposed to serve. Low income people are forced further and further out, and entire economic sectors are starting to experience people insolvency. The city is being slowly turned into a monoculture of tech workers, and office buildings.
You're preaching to the choir here brother. You left out the traffic and insane drivers.
> The only thing the people of the city can bring themselves to do is try to legislate ever more controls on change and try to keep the city in some sort of 80's time warp. However they just banned selling e-cigarettes, and passed a law making sure the government doesn't use facial recognition software so I guess they don't feel the crisis of homelessness or high rents is something that should be given their attention.
Yeah, SF city politics is a shit-show. Everyone is so busy being Progressive that they can barely make any progress. (You like that line? You can use it. ;-) But you're being unfair IMO. I watch SFGOVTV and I can tell you that people are very much concerned about and working on homelessness and out-of-control rents (along with a lot of other weird stuff. Like "Legacy Businesses", what's up with that? I'm kind of a lefty and even I feel that that's "commie-pinko" level economic meddling. But then again, I like most of the businesses that get on the registry and receive money. I can't really hate something too much that if it helps them stay viable through the rough seas. But then again again, it's such a blatant political machination: you have to get a Supervisor to sponsor your business to be considered. Or what about this new system they're rolling out to make homeless people use a special card and account with the city to receive any help. Orwellian surveillance is fine if we are using it to help them, eh? Or the police whose job it is to board buses and trains and "check your papers" to make sure you're not evading fare. That's not progressive, it's imperial. What would be progressive is making the buses free to ride. Or doing like in Seattle: it's not the drivers' job to collect fares. You can ride the bus in Seattle without paying. You're supposed to, but if you're broke you can just mumble an apology to the driver and ride anyway.)
Er, um, rant over. Sorry about that. SF city politics is a hellofa drug...
Anyhow, we need to come together and think clearly about things to solve any of this. We have to balance growth (population and economic) with quality of life, advances in technology, ecological harmony, international politics and financial stuff, etc...
Commercial real estate is about cashing in quickly and selling shares of accelerated depreciation. Not gonna happen.
Woke rich people will continue to feel good about not chasing off the homeless people sleeping behind the garbage can and cash in. When the market tanks, they’ll walk away.
Sure, but how big is that change? The article references 31,000 homes in a country of 37 million people. If you assume the average of 3 people per home that's only "displacing" ~0.2% of the population.
So, now you not only displace people from that location you want the displacement to casecade across the rental market forcing large numbers of people to have a worse commute and or pay more in rent. Perhaps some people could possibly have a major problem with that idea.
PS: You can actually just search locations on Airbnb it’s rather concentrated magnifying this impact.
If by offering short term rentals you take 30% of the rentals off the market (which may only be 100 apartments), that has a huge impact. Rental prices are all about marginal demand.
There are other factors as well — there is a de facto price floor due to section 8 prevailing rent. Because of factors like the “just build” doesn’t work, as profitable new construction is high-end, and the older stock tends to turn into defacto hotels.
1 We had surplus housing. AirBnB would (probably) be fine from an availability perspective.
2 We have adequate housing. AirBnB would still not be good. A good portion of the available places for long term rent would be taken up by short term tenants and would drive up prices.
3 We have not enough housing. AirBnB same effects as 2, but even more so.
It seems to me that we live in situation 3. We need to build housing AND curb the excesses AirBnB. Just building more housing won't fix the problem. Just banning AirBnB won't suddenly give us an adequate housing supply.
I don't think anyone is going to get a lease somewhere just to visit.
What seems strange to me is the idea that tourists and small time local economic actors profiting handsomely from short term rentals should take priority over a majority of local citizens. If citizens don't like your plan, out your plan goes (very similar to how California residents keep killing upzoning).
If you're a local citizen and want to put a wrench in short term rentals, engage in the political process. Go to your representatives and tell them to enact legislation to do so if that's what you want, and if they won't you will assemble with other local citizen voters and vote them out. That's democracy.
1. http://insideairbnb.com/san-francisco/ 2. https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
Are you implying that it's impossible to construct an additional 31,000 homes across all of Canada?
If 100% of those units were converted into AirBnB that's another problem: why is the demand for short-term rentals so much higher than long-term ones? Again, not really AirBnB's fault.
I know that's partially the case in Ireland of why it's so hard to get housing. Landlords can make a full year's rental salary over the summer with AirBnB...Why rent long-term when you can do that?
It's also really unfavorable to be a landlord (at least in Ontario) as it's possible for a tenant to take up a lease and not pay for almost an entire year while you legally evict them. So I suppose it's understandable why people prefer to AirBNB their units, aside from making more money.
Really shitty situation all around.
Do you have evidence that the eviction issue is wide-spread enough to cause landlords to prefer AirBnB-ing to renting?
It looks like city centers have the highest density of AirBnBs. I find it hard to believe that people renting in city centers (let's be honest these are usually luxury apartments) not paying their rent are so frequently that the only recourse is for the landlord to turn to AirBnB to turn a profit.
To me, it seems the profit motive is a more likely explanation. The landlords have the ability to long-term rent, or use AirBnB. They _choose_ to use AirBnB because it is more profitable.
Just playing devil's advocate, but that assumes that the landlord didn't factor those things like eviction law into their decision of what type of property to buy and where to buy it.
Maybe the landlord made the decision between buying a rental property in a suburb and buying an AirBnB property in a city center and decided that the former case was infeasible due to eviction laws.
For instance, you can buy a small apartment building in metro vancouver for 2-5 million CAD. Same price as a couple of luxury apartments downtown.
But of course, who's going to pay for them and run them well? The nice thing about Airbnb is it created a competitive market, mechanisms to eliminate bad actors, customer service, price adjustments, insurance, and so on. You wouldn't get those things with a couple of hyper-efficient hotels. So it almost seems like we need the state to build the structure, and then allow people to bid on owning the rooms, and then renting them out on Airbnb. That way there could still be competition that drives all the useful features of Airbnb, but in a much more efficient form than the completely inefficient use of land that buying houses results in.
If landlords think short-term rentals are better for business than lease-based tenancy, then the amount of housing that would need to be built is much higher than demand.
Hopefully some regulation will be enacted as a result of this study but I won't hold my breath. Way too much money to be made by banks and RE agents in artificially restricting supply.
What if it's in a major international tourist destination?