The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it.
I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.
The rent is too danged high because the supply of rentals is too danged low with respect to market demand. If hotel demand is high enough to cut that far into regular rentals, that just means there aren't enough purpose-built hotels. The regulation chooses to protect long-term residents at the expense of visitors and owner-investors.
Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. And does it even truly protect them?
People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
Attacking rogue AirBnB users may satisfy shortsighted political goals, but removing artificial barriers to new housing construction would be better for everyone in the long term.
That said, the guy from the article is a dick that engages in willful fraud on a daily basis. NYC is right to go after people like him, but not at the expense of solving the underlying problem that produces such people as a symptom.
Price is high because the cost to produce additional supply is high. Period.
Regulations can and do stop lots of things. If the regulations don't stop anything, then why do they 'distort the natural behavior of the market'?
You can't claim that regulation is ineffective at affecting behavior while decrying its distortive effects at the same time.
Isn't that normal and just? People want something to happen, and they formalize this as law rather than applying mob violence, which is a Good Thing.
> People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
What you do with your property affects those around you; there's no god-given fundamental right to use your building for whatever you want to. We have things like zoning regulations for a reason - because we voted for them, because we wanted them.
> removing artificial barriers to new housing construction would be better for everyone in the long term.
I think everyone is in favour of new housing construction, but there's only so much Manhattan to go around. The choice is not between new houses and no new houses, or hotels and no hotels; it's between residential housing and hotels, and it's right that that choice be made democraticly.
which will in turn reduce the supply of apartments
available for residents
This is happening, but naturally is not fast. There are reasons why you wouldn't someone to demolish a skyscraper in the middle of Manhattan without oversight.
Adding to this problem is the state of infrastructure. Manhattan streets are packed, and most subway lines also. There is currently a proposal to up-zone the area directly around Grand Central and raise the height limits. This is a great thing, except all subway lines feeding Grand Central are already operating past peak capacity. Creating this extra space is pointless (and in fact detrimental) unless there is infrastructure ready to support it.
There are already infrastructure projects in place to alleviate this, but digging tunnels through bedrock is understandably not a fast affair. The East Side Access project will connect Penn Station and Grand Central, and alleviate some of the traffic at both. Adding to the complexity here is that Manhattan's underground is already filled with tunnels of all varieties, forcing new projects to tunnel ever deeper, with requisite cost and slowness.
The world is complicated, city planning is complicated. This isn't software where we can just deploy a new server - apartments, offices, subway lines, streets, sewers, power plants, cannot be willed into existence at a whim.
Hell, the biggest development project going on right now involves building on top of a train yard. This does not suggest an availability of actual empty land.
> "and there are tons of under-developed areas"
And yes, that's precisely what I referring to when I mentioned that any new development would have to involve demolition and replacement. Replacing a 15-story apartment complex with a 45-story apartment complex may be a good idea, but first you'd have to buy out all the owners in the building.
That sort of thing is neither simple nor fast.
The infrastructure problem exists still also. Spanish Harlem can be argued to be underdeveloped - and we can surely replace those buildings with tall apartment complexes... except the 4/5/6 subway is already massively oversubscribed. You can build apartments there, but said residents won't be able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this pressure, but we all know how fast that is going.
Same goes for basically all of Upper Manhattan - there are plenty of opportunities to replace buildings, but not enough infrastructure to move people around. Transportation (like most cities) is the biggest developmental bottleneck.
> " it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options."
You've missed the entire point of my post. "Construction friendliness" is not Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent in building replacement (read: buying out existing stakeholders) are. For all intents and purposes, Manhattan is "friendly enough".
There is a building that's finally going up near me in the Lower East Side - a replacement of an old walkup. The owners in the old building resisted sale for a long time, as it would involve displacing them, plus they (rightly) speculated that their property value would continue to increase. The solution at the end of the day is to offer existing owners a brand new (albeit small) apartment in the new building. Not only did it cost the builders money to demolish and erect the new building, but also to buy out the old owners and give them part of the new property for free. Things like this are why Manhattan is replacing buildings so slowly, not because Manhattan is somehow opposed to development.
There is a character to a city, and it is easy to destroy the things that make them worth living in.
First, residents strongly oppose it.
Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood
environmental impact studies (weirdly) can be used against projects
local "community boards" have a lot of power
and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
But what city with taxing authority would ever do this? As long as cities can take revenue from everyone regardless of their satisfaction with the city, there is a perverse incentive to oversubscribe city services. Since they are a monopoly over their whole territory, it is the same pressure as upon telecoms to add more customers without building out infrastructure.
That's why the person in this story not only needs to avoid the government, but also private-sector contract enforcement. Hence, he's looking for buildings with no doorman and no live-in super, since those would be more likely to notice his illicit activity. I don't see how that's libertarian or even Randian. Rand's view was that violating a contract is an act of indirect violence, essentially theft.
The devil's advocate here would say, "These contracts are in place because the market is rigged here by powerful, entrenched, rent-seeking interests that are colluding."
People who are subletting in violation of thier lease terms or co-op/condo agreement are not only breaking the law but also willfully breaching contracts they have freely agreed to. I thought that libertarians considered negotiated contracts a key mechanism of ordering a society?
I believe NYC forbids short-term sublets - that's the big issue here. Plus the taxes, of course.
The "inefficiency" you've spotted is that a business which ignores all rules, regulations and taxes will have a huge competitive advantage over those who comply. That's true in any industry, not just housing.