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The obvious solution to a severe shortage in apartments is to build more. Why doesn't Ireland do this? Pigeonhole principle: if K people want to be in Ireland

The obvious solution to a severe shortage in apartments is to build more. Why doesn't Ireland do this? Pigeonhole principle: if K people want to be in Ireland at any one time, and there are N < K apartments, K - N people will have a problem. All the folks criticizing AirBnB want to do is make sure they aren't the ones who face the problem.

matthewmacleod 10y ago
Not quite - Airbnb shifts demand from traditional tourist accommodation like hotels and guest houses into standard domestic units. I'm not arguing that this is necessarily bad, but it's really interesting to look at the reasons why this is happening and the negative effects it can have. Increasing domestic prices because of underutilisation is one.
- yummyfajitas 10y ago
  As I said: All the folks criticizing AirBnB want to do is make sure they aren't the ones who face the problem. Tourists are people too, and need a place to live. The folks in Barcelona just want to make sure it's the tourists, rather than them, who suffer from the housing shortage.
  - Symbiote 10y ago
    Tourists before AirBnB would simply not visit somewhere if the hotel price was beyond what they could afford. Is there any justification at all that could prioritise tourists over residents for living space?
    - YokoZar 10y ago
      Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do. Similar motivations cause cities to build office buildings without corresponding homes. Empirically it seems like cities value tourists over residents -- if cities actually wanted residents, they'd approve construction of housing for them.
      - cauterized 10y ago
        And in many cases they HAVE approved construction of housing for them but the new (very slight and only relative) market slack is being eaten up by commercial operators on Airbnb.
      - cm3 10y ago
        > Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do. How does that work? Don't tourists use the same infrastructure?
        yummyfajitas 10y ago
        Tourists don't usually use schools or social services. This page suggests those make up 50% of the budget: http://gothamist.com/2013/04/11/interactive_chart_nycs_budget_break.php http://gothamist.com/2013/04/11/interactive_chart_nycs_budge... (I'm assuming "debt" and "pensions" are allocated proportionally.)
      - makomk 10y ago
        Tourism still incurs some costs, and a common solution to this is hotel taxes to pay for those costs. AirBNB dodges those taxes. Also, since AirBNB converts housing constructed for residents into tourist housing regardless of legality, it doesn't matter much which cities value more.
        colinbartlett 10y ago
        I can't help but think this whole thing could be solved by charging hotel taxes on AirBNB room nights. Can someone explain why it's not that simple?
        Xylakant 10y ago
        AirBnB does not share who's renting rooms. A significant share of the hosts use that to dodge taxes. Now AirBnB could collect and forward those taxes but well, they have no incentive to.
    - deleted 10y ago
      [deleted]
- semi-extrinsic 10y ago
  The upside of AirBnB-like approaches is flexibility. Each person doing one or more rentals (of units that they don't usually live in) has low total capex, meaning expanding to serve increased demand is very quick compared to building a hotel. But it's obvious that this increases both volatility and prices on both the rental and housing markets. I wouldn't be surprised if this becomes a problem and affected cities introduce heavy taxation on short-term renting out dwellings which you don't usually live in and which are not planned for commercial use. OTOH, "semi-commercial" actors renting out apartments has existed for a lot longer than AirBnB. We stayed in one of these in Rome for a week in '09, found through some website for private rentals (AirBnB went international in '11). So it's not really a new thing, just a slicker UX which may or may not increase total demand for such services.
abalone 10y ago
Macroeconomics is more complicated than that. Basically the property market overheated and crashed in a big way less than a decade ago, with lingering industry-wide effects.[1] Additionally lots of crappy houses were built so they added a bunch of quality regulations that have driven up the cost.[2] [1] http://www.reuters.com/article/ireland-economy-housing-idUSL5N16N36V http://www.reuters.com/article/ireland-economy-housing-idUSL... [2] http://www.ft.com/cms/s/0/15bb4d40-4714-11e5-b3b2-1672f710807b.html#axzz4CgE7Vf3h http://www.ft.com/cms/s/0/15bb4d40-4714-11e5-b3b2-1672f71080...
- arethuza 10y ago
  That first article says that the Irish government has introduced rent controls. Hardly surprising if there are controls over what people can charge that there is a lack of properties to rent?
  - trusche 10y ago
    It was actually the other way round. The very modest rent controls, hardly deserving that name, were introcuded after the lack of properties led to the rent explosion.
    - arethuza 10y ago
      Fair enough, I was just curious how Dublin compares with here in Edinburgh which does have a focus on flats (at least here in the centre in the Old & New Towns) and which has had a lot of apartment development recently on brown field sites (former breweries, hospitals, docks etc.). Edinburgh also has vast amounts of visitors and students and I've never heard much grumbling.
zuzun 10y ago
The obvious solution is to understand how governments work. Residents are the voters, not the tourists. Blame the cities banning holiday rentals all day, in the end they are acting in the best interest of their citizens.
- rorykoehler 10y ago
  Apart from their citizens making a living through the platform. From my experience in Berlin they are acting in the best interests of the hotel lobby. The citizens were just a convenient foil.
  - zuzun 10y ago
    The people it impacts negatively outnumber the people that benefit from it, it's as simple as that.
    - rorykoehler 10y ago
      That is highly debatable. Berlin needs 40,000 new units a year, Airbnb accounted for 12,000 units. Airbnb is a convenient scapegoat.
B1FF_PSUVM 10y ago
> to a severe shortage in apartments You're looking at it wrong. What AirBnB does is allow apartments to be rented as hotel rooms, at prices somewhere in-between. Thus you get mostly empty hotels and lots of mostly empty apartments (1/3 or 1/4 use yields better money than full-time rent). You've inverse-optimized resource usage.
- specialk 10y ago
  This isn't purely a resource allocation problem. There are real people finding themselves homeless or in bad living conditions because of the explosion in rents in Dublin. Families shouldn't have to live in hotel rooms. We need to remember that the change and disruption that companies like AirBnB bring are not always good for society as a whole. There is a supply and demand tension in Dublin over accommodation. Building more apartments, i.e. increasing supply, will help alleviate this tension. That doesn't mean we can't also tackle the problem from the other direction by reducing demand. AirBnB is demand. It's hard to tell how much any government would want to pull on a lever that might reduce demand. Those tourists bring valuable outside revenue into the city. We need them too. There's lots to balance here. Let's not optimise just revenue.
cm3 10y ago
Didn't they build many, many houses in Ireland before the crisis which then stood empty, debts unpaid and all?
- trusche 10y ago
  Yes they did, but those are mostly outside of Dublin, many of them are unfinished and unfit to live in.
deleted 10y ago
[deleted]
towelrod 10y ago
More to the point: Airbnb shifts regular, tax paying renters into a grey market -- non-renting, non-tax paying economy. If a city/country wants to base its rental units on a day-by-day, airbnb model, then fine. The problem is when airbnb comes into a regular market and "disrupts" that market by not paying hotel taxes or following local subletting laws. I say that as someone who very recently used airbnb for a great deal in NYC, and was admonished by the host not to talk about our situation in the lobby, the elevators, or anywhere else someone might overhear.

matthewmacleod 10y ago

Not quite - Airbnb shifts demand from traditional tourist accommodation like hotels and guest houses into standard domestic units. I'm not arguing that this is necessarily bad, but it's really interesting to look at the reasons why this is happening and the negative effects it can have. Increasing domestic prices because of underutilisation is one.

yummyfajitas 10y ago
As I said: All the folks criticizing AirBnB want to do is make sure they aren't the ones who face the problem. Tourists are people too, and need a place to live. The folks in Barcelona just want to make sure it's the tourists, rather than them, who suffer from the housing shortage.
- Symbiote 10y ago
  Tourists before AirBnB would simply not visit somewhere if the hotel price was beyond what they could afford. Is there any justification at all that could prioritise tourists over residents for living space?
  - YokoZar 10y ago
    Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do. Similar motivations cause cities to build office buildings without corresponding homes. Empirically it seems like cities value tourists over residents -- if cities actually wanted residents, they'd approve construction of housing for them.
    - cauterized 10y ago
      And in many cases they HAVE approved construction of housing for them but the new (very slight and only relative) market slack is being eaten up by commercial operators on Airbnb.
    - cm3 10y ago
      > Tourists are seen as a way to generate revenue for a city while not incurring the sorts of costs in services that residents do. How does that work? Don't tourists use the same infrastructure?
      - yummyfajitas 10y ago
        Tourists don't usually use schools or social services. This page suggests those make up 50% of the budget: http://gothamist.com/2013/04/11/interactive_chart_nycs_budget_break.php http://gothamist.com/2013/04/11/interactive_chart_nycs_budge... (I'm assuming "debt" and "pensions" are allocated proportionally.)
    - makomk 10y ago
      Tourism still incurs some costs, and a common solution to this is hotel taxes to pay for those costs. AirBNB dodges those taxes. Also, since AirBNB converts housing constructed for residents into tourist housing regardless of legality, it doesn't matter much which cities value more.
      - colinbartlett 10y ago
        I can't help but think this whole thing could be solved by charging hotel taxes on AirBNB room nights. Can someone explain why it's not that simple?
        Xylakant 10y ago
        AirBnB does not share who's renting rooms. A significant share of the hosts use that to dodge taxes. Now AirBnB could collect and forward those taxes but well, they have no incentive to.
  - deleted 10y ago
    [deleted]
semi-extrinsic 10y ago
The upside of AirBnB-like approaches is flexibility. Each person doing one or more rentals (of units that they don't usually live in) has low total capex, meaning expanding to serve increased demand is very quick compared to building a hotel. But it's obvious that this increases both volatility and prices on both the rental and housing markets. I wouldn't be surprised if this becomes a problem and affected cities introduce heavy taxation on short-term renting out dwellings which you don't usually live in and which are not planned for commercial use. OTOH, "semi-commercial" actors renting out apartments has existed for a lot longer than AirBnB. We stayed in one of these in Rome for a week in '09, found through some website for private rentals (AirBnB went international in '11). So it's not really a new thing, just a slicker UX which may or may not increase total demand for such services.

abalone 10y ago

Macroeconomics is more complicated than that. Basically the property market overheated and crashed in a big way less than a decade ago, with lingering industry-wide effects.[1] Additionally lots of crappy houses were built so they added a bunch of quality regulations that have driven up the cost.[2] [1] http://www.reuters.com/article/ireland-economy-housing-idUSL5N16N36V http://www.reuters.com/article/ireland-economy-housing-idUSL... [2] http://www.ft.com/cms/s/0/15bb4d40-4714-11e5-b3b2-1672f710807b.html#axzz4CgE7Vf3h http://www.ft.com/cms/s/0/15bb4d40-4714-11e5-b3b2-1672f71080...

arethuza 10y ago
That first article says that the Irish government has introduced rent controls. Hardly surprising if there are controls over what people can charge that there is a lack of properties to rent?
- trusche 10y ago
  It was actually the other way round. The very modest rent controls, hardly deserving that name, were introcuded after the lack of properties led to the rent explosion.
  - arethuza 10y ago
    Fair enough, I was just curious how Dublin compares with here in Edinburgh which does have a focus on flats (at least here in the centre in the Old & New Towns) and which has had a lot of apartment development recently on brown field sites (former breweries, hospitals, docks etc.). Edinburgh also has vast amounts of visitors and students and I've never heard much grumbling.

zuzun 10y ago

The obvious solution is to understand how governments work. Residents are the voters, not the tourists. Blame the cities banning holiday rentals all day, in the end they are acting in the best interest of their citizens.

rorykoehler 10y ago
Apart from their citizens making a living through the platform. From my experience in Berlin they are acting in the best interests of the hotel lobby. The citizens were just a convenient foil.
- zuzun 10y ago
  The people it impacts negatively outnumber the people that benefit from it, it's as simple as that.
  - rorykoehler 10y ago
    That is highly debatable. Berlin needs 40,000 new units a year, Airbnb accounted for 12,000 units. Airbnb is a convenient scapegoat.

B1FF_PSUVM 10y ago

> to a severe shortage in apartments You're looking at it wrong. What AirBnB does is allow apartments to be rented as hotel rooms, at prices somewhere in-between. Thus you get mostly empty hotels and lots of mostly empty apartments (1/3 or 1/4 use yields better money than full-time rent). You've inverse-optimized resource usage.

specialk 10y ago
This isn't purely a resource allocation problem. There are real people finding themselves homeless or in bad living conditions because of the explosion in rents in Dublin. Families shouldn't have to live in hotel rooms. We need to remember that the change and disruption that companies like AirBnB bring are not always good for society as a whole. There is a supply and demand tension in Dublin over accommodation. Building more apartments, i.e. increasing supply, will help alleviate this tension. That doesn't mean we can't also tackle the problem from the other direction by reducing demand. AirBnB is demand. It's hard to tell how much any government would want to pull on a lever that might reduce demand. Those tourists bring valuable outside revenue into the city. We need them too. There's lots to balance here. Let's not optimise just revenue.

cm3 10y ago

Didn't they build many, many houses in Ireland before the crisis which then stood empty, debts unpaid and all?

trusche 10y ago
Yes they did, but those are mostly outside of Dublin, many of them are unfinished and unfit to live in.

deleted 10y ago

[deleted]

towelrod 10y ago

More to the point: Airbnb shifts regular, tax paying renters into a grey market -- non-renting, non-tax paying economy. If a city/country wants to base its rental units on a day-by-day, airbnb model, then fine. The problem is when airbnb comes into a regular market and "disrupts" that market by not paying hotel taxes or following local subletting laws. I say that as someone who very recently used airbnb for a great deal in NYC, and was admonished by the host not to talk about our situation in the lobby, the elevators, or anywhere else someone might overhear.