5 ms·

Look, I'm a YIMBY but I think that cities need to keep AirBNB under control. Competition won't solve all housing problems, particularly if you throw residential

by rspeer 10y ago

Look, I'm a YIMBY but I think that cities need to keep AirBNB under control. Competition won't solve all housing problems, particularly if you throw residential housing and hotels into the same market, as AirBNB does. Cities have every reason to incentivize people to actually live there -- and yes, most successful cities need a lot more space for people to actually live in. Any gains you could accomplish here are defeated when the new living space is set aside for visitors instead of residents.

LanceH 10y ago
Perhaps cities like SF and Portland should let owners of property build more housing on that property instead of further restricting their rights.
- pyrophane 10y ago
  It's not an either/or situation. Yes, crowded cities need to take steps to increase the housing supply, but they should also make sure Airbnb isn't further diminishing the supply.
  - mikeyouse 10y ago
    It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today.
    - smallnamespace 10y ago
      > Building housing lowers house prices in the future That's not strictly true -- if market participants pay attention to planned new starts, then the effect of additional supply should be seen immediately in today's prices.
      - mikeyouse 10y ago
        In a city like SF, that's far from given. There's the discount rate of rent-in-hand today vs. when the construction completes, but more importantly there's a ton of uncertainty around projects. Planned new starts means very little in a city / region that regularly scraps or significantly delays projects due to random bureaucratic machinations.
        smallnamespace 10y ago
        You're right that information doesn't perfectly filter through and starts aren't a particularly reliable metric. My intended point was very narrow though: your default assumption should be that changes in expectations of future cashflows have an immediate impact on price, unless you can point to a particular market friction that prevents this adjustment. Basically, you should distinguish between timing of cash flows (which don't generally matter except for discounting), and the timing of the information flowing into the market (which does). If there were a credible plan to build more much housing and the market believed in it, it should affect the price more or less immediately. Discount rates are very low -- $1 a year from now is more or less worth $1 today.
    - BurningFrog 10y ago
      It also raises hotel prices.
    - twblalock 10y ago
      > It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today. That's not necessarily true. You assume that apartments that are used as full-time AirBnB rentals would instead be rented out to full-time tenants as "normal" apartments. The problem is that if those apartments would be subject to rent control, a lot of landlords would prefer to keep them vacant. It's estimated that over ten thousand units in San Francisco are intentionally left vacant by their owners, because having a rent-controlled tenant in the unit makes it a lot harder to sell the property. Landlords who purchased their apartments for their appreciation value, rather than monthly cashflow, are pretty likely to do this. If those landlords choose to leave their properties vacant, that will be a short-term reduction in the housing supply rather than an increase. If those landlords choose sell their properties immediately, there is no telling what will happen -- some may be rented out, some may be converted into luxury apartments with smaller numbers of units, and some may be converted into single-family homes (yes, this really happens). Some may be bought by other landlords who intend to leave them vacant and flip them in a few years for a quick profit. Some may be torn down and replaced with larger buildings, which would result in a short-term decrease in supply in exchange for a long-term increase. Of course, some landlords will rent out the apartments, which will result in a short-term increase in supply. But they won't all do that. I expect the effect on rents to be fairly small, and the effect on lawyers' bank accounts to be large.
      - michaelmrose 10y ago
        Perhaps in areas where housing is in short supply holding a housing vacant should results in a rather punitive tax.
        allengeorge 10y ago
        Agreed, but the open question is how to determine that a household is "vacant" (turns out it's harder than one imagines). I'm a big fan of the: if it's not registered as your primary address in tax filing documents it's treated as an investment property and is taxed as such. If no one has that address as a primary address then it's treated as investment + vacant.
        10y ago
  - LanceH 10y ago
    "Should" they? What compensation do they offer owners in exchange for their popular political maneuvers? Maybe they should exhaust other avenues of solution before taking away someone else's ownership rights? Or you could just go with, "we know better, this is how we'll dispose of other people's property." This is the attitude that cost Clinton the election.
    - rspeer 10y ago
      Your property isn't a hotel and you didn't expect it to be one when you bought it.

by rspeer 10y ago

LanceH 10y ago

Perhaps cities like SF and Portland should let owners of property build more housing on that property instead of further restricting their rights.

pyrophane 10y ago
It's not an either/or situation. Yes, crowded cities need to take steps to increase the housing supply, but they should also make sure Airbnb isn't further diminishing the supply.
- mikeyouse 10y ago
  It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today.
  - smallnamespace 10y ago
    > Building housing lowers house prices in the future That's not strictly true -- if market participants pay attention to planned new starts, then the effect of additional supply should be seen immediately in today's prices.
    - mikeyouse 10y ago
      In a city like SF, that's far from given. There's the discount rate of rent-in-hand today vs. when the construction completes, but more importantly there's a ton of uncertainty around projects. Planned new starts means very little in a city / region that regularly scraps or significantly delays projects due to random bureaucratic machinations.
      - smallnamespace 10y ago
        You're right that information doesn't perfectly filter through and starts aren't a particularly reliable metric. My intended point was very narrow though: your default assumption should be that changes in expectations of future cashflows have an immediate impact on price, unless you can point to a particular market friction that prevents this adjustment. Basically, you should distinguish between timing of cash flows (which don't generally matter except for discounting), and the timing of the information flowing into the market (which does). If there were a credible plan to build more much housing and the market believed in it, it should affect the price more or less immediately. Discount rates are very low -- $1 a year from now is more or less worth $1 today.
  - BurningFrog 10y ago
    It also raises hotel prices.
  - twblalock 10y ago
    > It's also a temporal issue -- Building housing lowers house prices in the future, restricting AirBnB lowers house prices today. That's not necessarily true. You assume that apartments that are used as full-time AirBnB rentals would instead be rented out to full-time tenants as "normal" apartments. The problem is that if those apartments would be subject to rent control, a lot of landlords would prefer to keep them vacant. It's estimated that over ten thousand units in San Francisco are intentionally left vacant by their owners, because having a rent-controlled tenant in the unit makes it a lot harder to sell the property. Landlords who purchased their apartments for their appreciation value, rather than monthly cashflow, are pretty likely to do this. If those landlords choose to leave their properties vacant, that will be a short-term reduction in the housing supply rather than an increase. If those landlords choose sell their properties immediately, there is no telling what will happen -- some may be rented out, some may be converted into luxury apartments with smaller numbers of units, and some may be converted into single-family homes (yes, this really happens). Some may be bought by other landlords who intend to leave them vacant and flip them in a few years for a quick profit. Some may be torn down and replaced with larger buildings, which would result in a short-term decrease in supply in exchange for a long-term increase. Of course, some landlords will rent out the apartments, which will result in a short-term increase in supply. But they won't all do that. I expect the effect on rents to be fairly small, and the effect on lawyers' bank accounts to be large.
    - michaelmrose 10y ago
      Perhaps in areas where housing is in short supply holding a housing vacant should results in a rather punitive tax.
      - allengeorge 10y ago
        Agreed, but the open question is how to determine that a household is "vacant" (turns out it's harder than one imagines). I'm a big fan of the: if it's not registered as your primary address in tax filing documents it's treated as an investment property and is taxed as such. If no one has that address as a primary address then it's treated as investment + vacant.
      - 10y ago
- LanceH 10y ago
  "Should" they? What compensation do they offer owners in exchange for their popular political maneuvers? Maybe they should exhaust other avenues of solution before taking away someone else's ownership rights? Or you could just go with, "we know better, this is how we'll dispose of other people's property." This is the attitude that cost Clinton the election.
  - rspeer 10y ago
    Your property isn't a hotel and you didn't expect it to be one when you bought it.