25 ms·

The Airbnb Bubble Popping Will Pop the Housing Bubble

100 points by celtoid 3y ago

adamleithp 3y ago
I’m remortgaging next year and with interest rates as they are and what they’re predicted to be, I’ll be paying off only interest. I’ll be back to paying rent essentially. It’s a scary thought. I don’t know how people (not 4%) are surviving. How would the housing market bubble bursting affect people in this same situation?
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- drewg123 3y ago
  Please don't accuse me of being a boomer, but I view interest rates as finally getting back to normal. When I bought my first house in the early 2000s, mortgage rates were in the 6-7% range. I remember my parents had a 13% mortgage in the 80s. Its only in the last few decade or so that we've seen these 5% or lower rates. I think we just have to get used to it, and maybe the AirBnB crash will help at least lower the price of the house and make things more affordable..
  - iLoveOncall 3y ago
    > I remember my parents had a 13% mortgage in the 80s. It could be a 100% interest rate, without also looking at the cost / income ratio it's meaningless.
  - preommr 3y ago
    The difference is that wages have not kept up with inflation nor with productivity and house prices are much higher. And another big problem is that the whole thing was poorly managed. People built lives around low interest rates, and people that were responsible got screwed over. I don't see how we suddenly flip that. Expectations were not clearly communicated. I often feel like a lot of social policy is simple as long as people understand the tradeoffs and everyone is on the same page. Unfortunately that has not been the case.
    - drewg123 3y ago
      I'm hoping the recent trend towards more active, powerful unions that we're starting to see now will reverse the wage trends. The problem is that the very low interest rates we've had over the last decade are just not sustainable long term. At the very least, the Fed needs a quick, easy way to stimulate the economy, and having a minuscule prime rate leaves them without the biggest tool in their toolbox.
      - pfannkuchen 3y ago
        Unions will only be able to increase wages while preserving the company if we remove cheap, low wage foreign competition. I think that has been a root problem for awhile.
    - piuantiderp 3y ago
      They haven't kept because of the low rates. That has now changed but it might take a decade
    - itsoktocry 3y ago
      Why would you build your life around low interest rates? Historical rates are a Google away. If you levered up with zero room for rising rates, you were not responsible. What's with all the people complaining about the rates? I'm appreciating earning 5% on my savings. There are two sides to every trade.
  - palmer_fox 3y ago
    Without posting the details, was 13% that your parents paid a significant chunk of their joint earnings? This is the more important aspect of the current situation, not the percentage number itself.
    - drewg123 3y ago
      I wasn't privy to too much of their financial details, but I know the rough price of the house. Assuming we were "average", based around average income for the year we moved there, it was about 40% of the average us income.
      - palmer_fox 3y ago
        Huh. According to this post the payment-to-income ratio now is around where it was in the early 2000s, but is higher than in the 1990s. Both still significantly lower than the 40% your parents paid. https://www.businessinsider.com/housing-market-homeowners-spending-third-of-income-mortgage-payments-2022-4 https://www.businessinsider.com/housing-market-homeowners-sp...
  - bick_nyers 3y ago
    Well if my home price decreased in value by 20% that would probably give me roughly the same payment at a 7% interest rate (versus the 3.25% I currently have). The issue of course being that my house has slightly increased in value during the time that interest rates started to increase. When you combine those two things together if I bought my house today I would pay about $1,000 more a month for the same 3 bedroom house that I closed on not even 2 years ago.
  - cjs_ac 3y ago
    Interest rates are definitely returning to normal, and home prices will simply have to decrease correspondingly. Here's a graph of the Bank Rate of the Bank of England (the UK's central bank) going back to 1694: https://fred.stlouisfed.org/series/BOERUKM https://fred.stlouisfed.org/series/BOERUKM
  - AnimalMuppet 3y ago
    Depends on how you define "normal". My parents had a 4 7/8% mortgage on a house they bought in 1966. (The only difference is that they had a prepayment penalty. The 1970s and 80s taught lenders why they shouldn't put that in.) So, depending on your time frame, the 70s and 80s were abnormally high, post-2008 was abnormally low, and 5%-ish is "normal". (I think, if you keep going back, 5% continues to be kind of normal, but I don't have the data in front of me.)
    - delecti 3y ago
      > Depends on how you define "normal" I think the housing market has been too variable over the timespan when it has really existed (~100 years) for there to even be a "normal". I do think your guess of 5% for the short-term future is probably not too crazy though.
  - heurist 3y ago
    The long-term historical baseline interest rate for any kind of debt is 6%. I tend to see it as normal too, though may go high for a while in reaction to the artificially low rate of the last decade. Home prices relative to household income are high though.
- lowbloodsugar 3y ago
  Why do you have to remortgage?
  - jrs235 3y ago
    Probably and ARM loan.
  - jacquesm 3y ago
    Probably the end of a fixed interest period approaching. This is the case for some %age of the total number of mortgages out there every year. It's also the moment you're going to be taken advantage of.
    - itsoktocry 3y ago
      Taken advantage of how? Where you taking advantage of the bank with the prior rates?
      - jacquesm 3y ago
        Taken advantage of because you have to deal with them. Previously you had the option to walk away. But when the fixed interest term expires you are going to have to make some kind of deal because very few people can switch to being homeless or paying off their entire mortgage at the drop of a hat.
  - palmer_fox 3y ago
    Presumably a 10/30 loan or something similar. Many homeowners are facing the same problem with the interest rate now being significantly higher than when they got a 10/30 initially.
  - rbjorklin 3y ago
    I think most places outside of the US has fixed term lengths of max 5 years for which you can lock in your interest rate.
    - 3y ago
RugnirViking 3y ago
here's hoping! let the whole rotten edifice fall. I ain't got nothing to lose. investors should not be buying housing stock.
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- pixl97 3y ago
  > I ain't got nothing to lose. Do you have a job? Or did you forget about the 2008 wreck that took everything else down with it?
RC_ITR 3y ago
It's always amazing to me that people will write these long articles and then do things like compare real median income (adjusted to account for the price of housing) with nominal rent prices. For context, here's nominal rent vs. nominal income, both indexed to 1985. https://fred.stlouisfed.org/graph/fredgraph.png?g=18r0r https://fred.stlouisfed.org/graph/fredgraph.png?g=18r0r EDIT: Some criticisms of the charts the author uses: 1) The Case Schiller chart is in I guess "units"? The underlying data is an index to 2000, so saying it dropped '50' (going from 180% of 2000 to 130% of 2000) is for the most part meaningless. The farther you get from the year 2000, the bigger the numbers will look. 2) The investor purchases thing is just a noisy first derivative of the interest rate chart. (https://fred.stlouisfed.org/graph/fredgraph.png?g=18r18 https://fred.stlouisfed.org/graph/fredgraph.png?g=18r18) 3) Population doesn't occupy houses, households do and those have grown faster than housing units. (https://fred.stlouisfed.org/graph/fredgraph.png?g=18r1T https://fred.stlouisfed.org/graph/fredgraph.png?g=18r1T) 4) See above 5) There's a lot of complex policy debate about whether or not we are in secular demand crisis, but the MBS chart is all about lowering interest rates to increase demand. I agree that has unintended consequences, but the author seems to forget that builders pay interest rates too.
- msoad 3y ago
  For me it was the chart for investor house purchases. It's not shocking that investors are not excited to purchase properties with 7% interest rates when returns on investment properties are less than 7% usually.
- throwawaymaths 3y ago
  with the caveat that we don't know what the bottom blue line looks like to date, from your nominal/nominal chart being in a bubble seems pretty plausible (assuming we call the 2006-2008 deflection a bubble)
  - RC_ITR 3y ago
    Sure, but the author is implying that rent has grown 3x income and that is simply not true.
mkoubaa 3y ago
And good riddance to the bubble. I say it as a homeowner too
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- Mordisquitos 3y ago
  But what about your property value? What about your net worth? Or are you one of those radicals who own a home to —*shudders*— live in it, rather than for its natural purpose as a financial investment?
  - blindriver 3y ago
    My property value in the SF Bay Area was reassessed for $700k lower than my purchase price. Sucks but it means my property tax dropped by over 20% and I also won't leave my house since my interest rate is 2.6%.
  - enahs-sf 3y ago
    It seems unlikely that there’s another 10x return for me like my parents saw on their house from the 80s so might as well just buy to live in a place.
  - carlosjobim 3y ago
    Your comment is sarcastic, but the reason home owners love the bubble is because they can borrow money against their house instead of working for a living. So if you were lucky in real estate you can slack off at an easy job while making your minimum mortgage payments and live a comfortable life on borrowed money, maybe get a new car and a nice vacation? Or if you're ambitious you borrow money against the house to renovate it and build it larger. Slack off at an easy job and you have energy to do renovations in the evening. Every 10 dollars borrowed to do renovations becomes at least 20 dollars in increased home value when the renovations are finished, and as a bonus you get to live in the newly renovated house. You don't need to sell, instead take out another loan against your now more valuable house - the bank is eager to help. It's called a "real estate career". Compare that to working for a living as your "career": Every 10 dollars of productivity you put in for your boss turns to 7 dollars in wages and after taxes you have 4 dollars. Not to mention the taxes and tributes as a small business owner or independent. Which is the smart move? Which is the fool's move? If you talk to everyday people, what is their dream? What would they like to achieve? Will they say they want to invent something? Create a huge business? Become best in the world or at least in their region in some sport or hobby? Very few will answer this. Most will answer: "I want to own a bunch of condos and live on the rent". That is the dream.
Bukhmanizer 3y ago
No it won’t. This reads of straight fantasy. The idea that an extreme minority is going to panic the majority into selling at bargain basement prices is absurd. It’s far more likely that either 1. People simply choose not to sell their houses; as most people who own one or more homes have that option, or 2. The 64% of people buy the homes selling for cheap, and resell for a profit
- palmer_fox 3y ago
  My (very limited, admittedly) observation is that people who own multiple properties do not panic-react to the market changes. A great example of that is London, where a vast number of houses and flats are unoccupied and that doesn't seem to bother the very affluent class owning the properties.
  - Bukhmanizer 3y ago
    Agreed. Largely because they have the capital to hold on to the property, and also for as long has anyone has been alive, in most places owning a house has been either a safe or unbelievably lucrative investment.
  - vidarh 3y ago
    The notion of lots of empty houses and flats in London is severely exaggerated. Sure, there are some tiny areas where lots of owners are people who have multiple homes, and so spends little time each place. But most of London haven't got that much empty space. The London rental market is if anything completely overheating at the moment due to lack of supply.
    - palmer_fox 3y ago
      Both West London and (surprisingly) East London had many unoccupied houses a few years back. Even in areas around Hackney road / Bethnal Green, which I would guess are not even really investment properties but more like long-term wealth assets. Agreed on the overheated market. My argument was that these properties are completely off the market and the owners won't panic-sell them
satvikpendem 3y ago
As long as new supply is not being built, whether due to restrictive zoning, NIMBYism, or other such reasons, the bubble will not burst. Too many people simply want too few homes. The answer is to build high density housing in the places people want to live in, usually major cities.
- LapsangGuzzler 3y ago
  Which will not happen because of the NIMBYism you describe. Local and state governments tend to have a high representation of property owners relative to the folks who really need this change to happen. It's "F you got mine" applied to housing policy.
  - 0xParlay 3y ago
    Also tragic is people without homes fighting a proxy war with “developers” because of their podcast centric understanding of economics. It’s more important that developers don’t make a profit than increasing the supply of homes and nothing will change their minds. If new housing supply has the word “luxury” in the name then lord help you. Gentrifying a community with new houses is like the worst thing a person could do.
- iamdamian 3y ago
  I'm very interested in the topic but skeptical of sweeping claims like this. What is the most definitive evidence (actual data plus analysis by economists) that you can point me to that proves this is true?
  - jonhohle 3y ago
    It’s not true (at least not for the past 20 years nationwide). New housing has grown faster than population growth. In 2000 there were 113 units per capita vs 145 per capita today.[0] The average number of people per household hasn’t changed significantly since then, so there is technically 30% more housing available in the US than 20 years ago. Not all of that housing is where people want it, investors are collecting properties like Pokémon, the vast majority of people can only afford a house half the price they could before interests rates rose, and those with mortgages are stuck with their low rates and little incentive to move (or at least sell). So it’s not the lack of units that’s the issue, but a market that (surprise!) favors the wealthy and entrenched. If you had cash, houses could be found at absurdly low prices 12 years ago. But as always, the climate favored the wealthy whose credit score wasn’t wrecked, who had excess capital to deploy, and were willing to tie it up in real estate for 5-10 years as the market recovered. 0 - https://twitter.com/Econimica/status/1686999658483314688 https://twitter.com/Econimica/status/1686999658483314688
cogogo 3y ago
This smells a lot like when crypto people say their markets will affect greater financial markets. The scale is just not there.
- simmerup 3y ago
  In hot markets house prices are decided on the margins, so a small group of people can have an outsized input on prices
  - cogogo 3y ago
    My comment was definitely flippant but in large metro areas airbnb at the margin leading to a rapid price increase is not the problem. It’s supply. No supporting evidence here because it’s pretty broadly available for many real estate markets.
    - bagels 3y ago
      If there is suddenly 5x the supply from airbnb divestment, it can move prices. It seems like the winning move is probably to just do a regular rental instead of selling though.
ilamont 3y ago
It's not uncommon to visit tourist-magnet cities and see entire buildings with only a few lights on, as many units are owned by the wealthy and left empty, as rents are not as important as having a safe place to "park surplus capital." Thousands of other units have been pulled from the long-term rental market to reap the higher returns of STVRs [short term vacation rentals]. In NYC, another sign of STVR buildings are lockboxes chained to metal railings outside. Starting tomorrow (September 5) such rentals are supposed to follow very strict new rules introduced by the Adams administration including hosts required to live in the same unit and reservation caps of no more than 2 people. Whole apartment rentals are banned unless the term is longer than 30 days. https://www.thecity.nyc/2023/8/15/23832212/how-new-airbnb-registration-system-works https://www.thecity.nyc/2023/8/15/23832212/how-new-airbnb-re...
- palmer_fox 3y ago
  Haven't heard of this change! Thanks for posting. Curious to see how this will affect the STVR market (even just the number of postings and their availability on AirBnb).
  - ilamont 3y ago
    If the rules are backed by strong enforcement, it will gut the market and likely result in many airbnb investor-type landlords selling properties. Whether this leads to the "bubble popping" scenario described in the parent article remains to be seen.
    - palmer_fox 3y ago
      Someone mentioned in this thread that a likely scenario is these landlords switching to mid- or long-term rentals instead of selling. Which sounds very plausible to me, especially in a city like NYC, where the rental market is always hot.
- Bukhmanizer 3y ago
  > In NYC, another sign of STVR buildings are lockboxes chained to metal railings outside. Maybe as a correlation, but these lockboxes are used for everything in NYC, dogwalkers, nanny’s, house cleaners, apartment viewings, etc.
futureshock 3y ago
Housing is different than other kinds of assets because it is also essential for nearly everyone to have a home. Most people in the market for a home only have their paychecks and credit from the bank. Median wages are quite a bit lower than FANG salaries and banks only give credit to people with appropriate incomes buying appropriately priced homes. Governments also need to keep people in housing and voters will kick out any government that fails too hard at that. So unlike bitcoin, housing cannot stay irrational and divorced from fundamentals forever. Real people need to use real paychecks and actual local credit unions need to look at those purchases and see a safe bet. If that system stays out of whack for too long, everything collapses, the banks’ business model, the housing market’s prices, the ruling party’s majority, rule of law as the people resort to squatting and the capitalist system that failed in the simple task of keeping people out of the rain and cold.
nchase 3y ago
Dead for me - anyone have a mirror?
jppope 3y ago
Considering most of those houses in question here were bought at 3% interest rates it seems unlikely that the wealthy would sell at a loss rather than just switch from STVR to medium-term or long term rentals where they would make less money. The housing market is still short on supply and at the purchase prices/ interest rate combo they have a lot of room to be able to ride it out. Besides, its not residential homes that are a ticking time bomb, its commercial properties... Office workers are not going back to the office.
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- drewg123 3y ago
  I guess the question is how many of them were bought with ARMs, and when do those ARMs adjust?
- voisin 3y ago
  There are all sorts of renter protections that come into play once you are no longer a short term vacationer. I think these protections will turn “investors” off.
- phpisthebest 3y ago
  >>Office workers are not going back to the office. I am not seeing this. Major companies are forcing the issue, and employee can pound their refusal all they want but at the end of the day I think we not going to see a normal fully remote work force. At best you are going to see a hybrid where you get 2 or 3 days a week of WFH, and the balance in the office. Further from personal experience I somewhat agree with the management because I have seen LOTS of abuse of WFH from employees.
  - tigeroil 3y ago
    At first I was concerned about abuse of WFH by employees too, but then I realised, people in the office often aren't particularly productive either. From my own team, if I had to guess, the actual number of productive hours are similar. Granted, I think it probably varies dramatically by company / team, and I get the impression that some places take WFH much less seriously than we do (as in, not goofing off).
blindriver 3y ago
I see a lot of Airbnb-hate online like reddit or Twitter, but financially I see no sign of Airbnb slowing down at all. It really just seems like a case of more light and no heat at this point.
- lkrubner 3y ago
  I think you mean STRs not AirBnB? STRs are still growing, but AirBnB is facing much more competition from VRBO and Booking.com and Google Travel then it has previously faced. When I consulted at https://futurestay.com https://futurestay.com I could see the income shifting from AirBnB to Booking.com.
  - blindriver 3y ago
    Except all of Airbnb's financial metrics are up and to the right. The individual Airbnber might be having issues but Airbnb as a whole isn't.
- itsoktocry 3y ago
  The fact that it isn't slowing down is why all of the pushback and legislation is happening. Their finances will be a lagging indicator.
resolutebat 3y ago
Hugged to death, cache here: http://webcache.googleusercontent.com/search?q=cache%3Ahttps%3A%2F%2Fwww.oftwominds.com%2Fblogaug23%2Fairbnb-bubble8-23.html http://webcache.googleusercontent.com/search?q=cache%3Ahttps...
nerdbert 3y ago
> Here's how we can tell if a speculative bubble is a bubble: everyone says it isn't a bubble It's hard to argue with this ironclad circular logic.
- scoofy 3y ago
  I understand your point, and it is a heuristic at best, but I'm having more and more trouble listening to the ever-growing gymnastics explaining how prices will not come down even though mortgage rates have gone from 2.75% to 7+% in the last year-and-a-half. I have yet to hear a convincing argument beyond "people will just stop selling their homes, forever," which is obvious nonsense. Once the adjustable-rate mortgages reset in a year-or-five, many, many folks will be forced to sell. Prices only come down when people are forced to sell at a loss.
  - pseudo0 3y ago
    Decreasing in real value, sure, but people hate the idea of a nominal loss when it comes to selling their house. And with inflation still higher than usual, it's entirely possible to have a 15-25% loss over five years in real terms while still looking like a wash on paper. That seems like a more likely scenario than an outright crash right now.
heurist 3y ago
STRs are still a small fraction of the total housing market, as are institutional investors. People need houses, this market is organic, though reacting to the massive flux in interest rates. Some data here: https://www.housingwire.com/articles/datadigest-inventory-and-the-purported-airbnb-crash/ https://www.housingwire.com/articles/datadigest-inventory-an...
cs702 3y ago
A key argument appears to be based on incorrect data. Specifically, as I write this, the OP states that the number of housing units per capita in the US is at an all-time high, per this plot (unless the OP changes it): https://www.oftwominds.com/photos2023/housing-per-capita8-23a.png https://www.oftwominds.com/photos2023/housing-per-capita8-23... Federal data shows otherwise. Here's the actual number of housing units divided by number of persons in the US: https://fred.stlouisfed.org/graph/?g=18r64 https://fred.stlouisfed.org/graph/?g=18r64 Otherwise, I'm reluctant to call the US housing market a "bubble," because I haven't seen the classic signs of financial mania.
- oofta-boofta 3y ago
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- Jeslijar 3y ago
  Your fed link says it is an estimate. I don't know where this guy gets data but I don't think the availability is that far off from the peak. https://twitter.com/Econimica/status/1698596620022186428 https://twitter.com/Econimica/status/1698596620022186428 You're talking less than 2 percentage points with the fed estimate anyway right?
hn_throwaway_99 3y ago
> I also want to stipulate that I am not talking about people of modest means who acquired rental properties by scrimping and saving their earned income and making sacrifices for decades--a strategy that is part of Self-Reliance ; I'm talking about the already-wealthy who are seeking to "maximize returns" on their unearned "surplus capital." The mental gymnastics folks go through to say "this behavior is ok if people I like do it, but it's wrong when those other gross people do it" always amuses me.
- delecti 3y ago
  In stories like this, I think that sort of thing is less about mental gymnastics, and more about picking a less controversial target to make their point with.
  - greenie_beans 3y ago
    yeah it's definitely intended to not alienate the audience
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- inpdx 3y ago
  While I cede your point to an extent, small time landlords are generally (1) small, local businesses, giving back to the local economy, and (2) very motivated to keep the places rented rather than sit idle. Which is to say at least somewhat invested in the community.
  - hn_throwaway_99 3y ago
    I 100% agree, but the difference you are pointing out relates to how a landlord acts and works with the community, not how they became a landlord in the first place. There are plenty of "small time landlords" who simply inherited a house when their parents passed away and chose to keep it to rent out. The author of the article is implying we should demonize these small time landlords because they didn't "scrimp and save their earned income over decades" (even though their parents did).
crazygringo 3y ago
> A systemic driver of this bidding war for rental properties is the "AirBnB" model of monetizing individual properties to compete with hotels and resorts for lodging... This has led to an artificial scarcity of housing in popular tourist destinations. This is fundamentally untrue, there is nothing "artificial" whatsoever. AirBNB allows a city to host a larger number of tourists than hotels alone can provide, which stimulates the local economy with lots of spending etc. This is not "artificial", it's real local economic growth. The scarcity of housing is then not caused by AirBNB -- it's caused by not constructing enough housing. It doesn't matter whether demand for new housing comes from tourism or people moving to the city to reside. Demand is demand, and tourism is not "artificial". Nobody calls people moving to the city for work an "artificial" cause of scarcity, and neither is tourism. The solution is to build more housing. Period.
- paulryanrogers 3y ago
  This assumes the owners of the STVR units are local. My guess is the longer the phenomenon goes unregulated the more they're owned by distant rent seekers.
  - crazygringo 3y ago
    If you're making a comparison, then you're assuming the owners of long-term residential buildings are local as well -- which they most certainly are not always. And I don't know why STVR owners would be less likely to be local than regular landlords. (And then if want to send money to hotels, remember those are almost always national chains!) But in any case no -- I'm talking primarily about the fact that tourists spend more on restaurants and attractions and shopping than locals. While I'm assuming that landlords just remain landlords.
    - paulryanrogers 3y ago
      Tourism is a double-edge sword. It prices out locals. Combined with unregulated STVR and some places become hollowed out shells, much like Venice.
ChumpGPT 3y ago
Has this guy ever been right? I just remember him writing about the coming housing crash for the last 15 years. It never manifested itself and just kept going up. He has never been correct in his predictions, so I would actually use him as a contrarian signal.
- givemeethekeys 3y ago
  This is the case for all financial doomsayers - they predict 100 of the last 5 crashes.
- xhkkffbf 3y ago
  Hah. I came here to post the same thing. He's definitely a permabear. I like some of his insights, but in the past he and his circle of friends have rarely been right. (Of course when they were, they were really right.)
mattbee 3y ago
1/100 UK properties is an (Airbnb) short let of some sort. But I don't buy that a few highly-leveraged people panic-selling their portfolios is going to bring down house prices at all. Even if that caused some _local_ downward pressure on house prices, why would that affect the demand for short lets? It might reduce the supply, so local room rates would go up. The remaining owners would have a lower-valued asset producing higher returns - a better return on a percentage basis, and in cash. Few people holding cash-generating property will be pushed into selling by a dip; lots of them will have held through 2007-14. Property value as investment is (still) a bit of a religion here. Councils and national regs have far more potential to dent Airbnb numbers (e.g. I'd guess we'll see sales tax added on nationally by the next government). But I don't see the political will anywhere yet, even in places like Edinburgh and London that have unusual regulation.
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amadeuspagel 3y ago
AirBnB is banned in many cities, and that doesn't make much of a difference. Urbanization is not slowing down, and that drives up prices if not enough housing is built. Popular Tourist Destinations tend to be places that people do not just travel but move to. > Here's how we can tell if a speculative bubble is a bubble: everyone says it isn't a bubble What an incredible sentence. Is a speculative bubble a kind of bubble? But then there's no need to tell whether such a speculative bubble is in fact a bubble. Anyway, we can tell if everyone says it isn't a bubble. Cars are a bubble. Lolipops are a bubble. Everyone says these things aren't bubbles, which means they must be.
tmaly 3y ago
My city just did a revaluation at peek prices using comparable sales. The state requires a revaluation every 10 years. This is going to create some other problems if the housing bubble does burst. The city has kept increasing the budget year over year. They are banking on these huge valuations to fund all sorts of spending. At the budget meeting, elderly people were speaking up on how they cannot afford the tax increase.
- scoofy 3y ago
  >At the budget meeting, elderly people were speaking up on how they cannot afford the tax increase. Property taxes are the only taxes that, by definition, the owner of the property can afford. The elderly people only mean that they "can't afford" their property taxes without changing their lifestyle in any way. To be fair to them, it's certainly challenging and uncomfortable, however, this is a consequence of their own making. None of them were complaining during the 30 years of their property values were going up as supply became more and more stifled.
gremlinsinc 3y ago
Cheers to that. IF the housing bubble pops, perhaps all the airbnb's revert back to actual long-term housing and the housing crisis / crazy rental market fixes itself. Capitalism, just fixing itself. Nothing to see here, no reason to worry.
fieldbob 3y ago
Booking and airbnb pushing prices all over the planet Ive been there I tried that Now a days I a bring a tent cuz I love waking up on a beach or on a pastureland with cows on the country side in the morning. You can also rent a cheap combi car and use it as a tent o vacation and go anywhere.
diogenescynic 3y ago
I think a lot of the economy/stock market has been juiced by people refinancing their homes as prices went up and using that money to buy second homes, new cars, remodel their homes, new phones, etc. Now that rates are higher, I think the rest of the economy will cool off as people can't use their homes as ATMs which will lead to a consumer spending slow down which will lead to a stock market correction which will lead to layoffs and finally start forcing more real estate transactions.
mancerayder 3y ago
So on the topic of NYC, and the new registration laws coming into effect tomorrow. From Bloomberg: "At stake is potentially millions of dollars in lost revenue for Airbnb in one of its biggest markets. Some 7,500 units don’t meet the requirements to apply for a license, according to market analytics firm AirDNA, and so will likely eventually disappear from the platform. More than half of those listings are frequently rented and account for about 40% of Airbnb’s income in New York City, according to AirDNA. In a lawsuit against the city over the rules, Airbnb said it earned $85 million in net revenue in 2022 in the Big Apple, which is about 1% of its total. New York has been sparring with Airbnb for years over rules that prohibit rentals in most apartments for fewer than 30 days without a tenant present. AirDNA estimates that only 9,500 of Airbnb’s 23,000 listings are legal." Will that few units (out of a city of 8.5M) coming back online really pop the housing bubble?

100 points by celtoid 3y ago

I’m remortgaging next year and with interest rates as they are and what they’re predicted to be, I’ll be paying off only interest. I’ll be back to paying rent essentially. It’s a scary thought. I don’t know how people (not 4%) are surviving. How would the housing market bubble bursting affect people in this same situation?

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drewg123 3y ago
Please don't accuse me of being a boomer, but I view interest rates as finally getting back to normal. When I bought my first house in the early 2000s, mortgage rates were in the 6-7% range. I remember my parents had a 13% mortgage in the 80s. Its only in the last few decade or so that we've seen these 5% or lower rates. I think we just have to get used to it, and maybe the AirBnB crash will help at least lower the price of the house and make things more affordable..
- iLoveOncall 3y ago
  > I remember my parents had a 13% mortgage in the 80s. It could be a 100% interest rate, without also looking at the cost / income ratio it's meaningless.
- preommr 3y ago
  The difference is that wages have not kept up with inflation nor with productivity and house prices are much higher. And another big problem is that the whole thing was poorly managed. People built lives around low interest rates, and people that were responsible got screwed over. I don't see how we suddenly flip that. Expectations were not clearly communicated. I often feel like a lot of social policy is simple as long as people understand the tradeoffs and everyone is on the same page. Unfortunately that has not been the case.
  - drewg123 3y ago
    I'm hoping the recent trend towards more active, powerful unions that we're starting to see now will reverse the wage trends. The problem is that the very low interest rates we've had over the last decade are just not sustainable long term. At the very least, the Fed needs a quick, easy way to stimulate the economy, and having a minuscule prime rate leaves them without the biggest tool in their toolbox.
    - pfannkuchen 3y ago
      Unions will only be able to increase wages while preserving the company if we remove cheap, low wage foreign competition. I think that has been a root problem for awhile.
  - piuantiderp 3y ago
    They haven't kept because of the low rates. That has now changed but it might take a decade
  - itsoktocry 3y ago
    Why would you build your life around low interest rates? Historical rates are a Google away. If you levered up with zero room for rising rates, you were not responsible. What's with all the people complaining about the rates? I'm appreciating earning 5% on my savings. There are two sides to every trade.
- palmer_fox 3y ago
  Without posting the details, was 13% that your parents paid a significant chunk of their joint earnings? This is the more important aspect of the current situation, not the percentage number itself.
  - drewg123 3y ago
    I wasn't privy to too much of their financial details, but I know the rough price of the house. Assuming we were "average", based around average income for the year we moved there, it was about 40% of the average us income.
    - palmer_fox 3y ago
      Huh. According to this post the payment-to-income ratio now is around where it was in the early 2000s, but is higher than in the 1990s. Both still significantly lower than the 40% your parents paid. https://www.businessinsider.com/housing-market-homeowners-spending-third-of-income-mortgage-payments-2022-4 https://www.businessinsider.com/housing-market-homeowners-sp...
- bick_nyers 3y ago
  Well if my home price decreased in value by 20% that would probably give me roughly the same payment at a 7% interest rate (versus the 3.25% I currently have). The issue of course being that my house has slightly increased in value during the time that interest rates started to increase. When you combine those two things together if I bought my house today I would pay about $1,000 more a month for the same 3 bedroom house that I closed on not even 2 years ago.
- cjs_ac 3y ago
  Interest rates are definitely returning to normal, and home prices will simply have to decrease correspondingly. Here's a graph of the Bank Rate of the Bank of England (the UK's central bank) going back to 1694: https://fred.stlouisfed.org/series/BOERUKM https://fred.stlouisfed.org/series/BOERUKM
- AnimalMuppet 3y ago
  Depends on how you define "normal". My parents had a 4 7/8% mortgage on a house they bought in 1966. (The only difference is that they had a prepayment penalty. The 1970s and 80s taught lenders why they shouldn't put that in.) So, depending on your time frame, the 70s and 80s were abnormally high, post-2008 was abnormally low, and 5%-ish is "normal". (I think, if you keep going back, 5% continues to be kind of normal, but I don't have the data in front of me.)
  - delecti 3y ago
    > Depends on how you define "normal" I think the housing market has been too variable over the timespan when it has really existed (~100 years) for there to even be a "normal". I do think your guess of 5% for the short-term future is probably not too crazy though.
- heurist 3y ago
  The long-term historical baseline interest rate for any kind of debt is 6%. I tend to see it as normal too, though may go high for a while in reaction to the artificially low rate of the last decade. Home prices relative to household income are high though.
lowbloodsugar 3y ago
Why do you have to remortgage?
- jrs235 3y ago
  Probably and ARM loan.
- jacquesm 3y ago
  Probably the end of a fixed interest period approaching. This is the case for some %age of the total number of mortgages out there every year. It's also the moment you're going to be taken advantage of.
  - itsoktocry 3y ago
    Taken advantage of how? Where you taking advantage of the bank with the prior rates?
    - jacquesm 3y ago
      Taken advantage of because you have to deal with them. Previously you had the option to walk away. But when the fixed interest term expires you are going to have to make some kind of deal because very few people can switch to being homeless or paying off their entire mortgage at the drop of a hat.
- palmer_fox 3y ago
  Presumably a 10/30 loan or something similar. Many homeowners are facing the same problem with the interest rate now being significantly higher than when they got a 10/30 initially.
- rbjorklin 3y ago
  I think most places outside of the US has fixed term lengths of max 5 years for which you can lock in your interest rate.
  - 3y ago

RugnirViking 3y ago

here's hoping! let the whole rotten edifice fall. I ain't got nothing to lose. investors should not be buying housing stock.

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pixl97 3y ago
> I ain't got nothing to lose. Do you have a job? Or did you forget about the 2008 wreck that took everything else down with it?

RC_ITR 3y ago

It's always amazing to me that people will write these long articles and then do things like compare real median income (adjusted to account for the price of housing) with nominal rent prices. For context, here's nominal rent vs. nominal income, both indexed to 1985. https://fred.stlouisfed.org/graph/fredgraph.png?g=18r0r https://fred.stlouisfed.org/graph/fredgraph.png?g=18r0r EDIT: Some criticisms of the charts the author uses: 1) The Case Schiller chart is in I guess "units"? The underlying data is an index to 2000, so saying it dropped '50' (going from 180% of 2000 to 130% of 2000) is for the most part meaningless. The farther you get from the year 2000, the bigger the numbers will look. 2) The investor purchases thing is just a noisy first derivative of the interest rate chart. (https://fred.stlouisfed.org/graph/fredgraph.png?g=18r18 https://fred.stlouisfed.org/graph/fredgraph.png?g=18r18) 3) Population doesn't occupy houses, households do and those have grown faster than housing units. (https://fred.stlouisfed.org/graph/fredgraph.png?g=18r1T https://fred.stlouisfed.org/graph/fredgraph.png?g=18r1T) 4) See above 5) There's a lot of complex policy debate about whether or not we are in secular demand crisis, but the MBS chart is all about lowering interest rates to increase demand. I agree that has unintended consequences, but the author seems to forget that builders pay interest rates too.

msoad 3y ago
For me it was the chart for investor house purchases. It's not shocking that investors are not excited to purchase properties with 7% interest rates when returns on investment properties are less than 7% usually.
throwawaymaths 3y ago
with the caveat that we don't know what the bottom blue line looks like to date, from your nominal/nominal chart being in a bubble seems pretty plausible (assuming we call the 2006-2008 deflection a bubble)
- RC_ITR 3y ago
  Sure, but the author is implying that rent has grown 3x income and that is simply not true.

mkoubaa 3y ago

And good riddance to the bubble. I say it as a homeowner too

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Mordisquitos 3y ago
But what about your property value? What about your net worth? Or are you one of those radicals who own a home to —*shudders*— live in it, rather than for its natural purpose as a financial investment?
- blindriver 3y ago
  My property value in the SF Bay Area was reassessed for $700k lower than my purchase price. Sucks but it means my property tax dropped by over 20% and I also won't leave my house since my interest rate is 2.6%.
- enahs-sf 3y ago
  It seems unlikely that there’s another 10x return for me like my parents saw on their house from the 80s so might as well just buy to live in a place.
- carlosjobim 3y ago
  Your comment is sarcastic, but the reason home owners love the bubble is because they can borrow money against their house instead of working for a living. So if you were lucky in real estate you can slack off at an easy job while making your minimum mortgage payments and live a comfortable life on borrowed money, maybe get a new car and a nice vacation? Or if you're ambitious you borrow money against the house to renovate it and build it larger. Slack off at an easy job and you have energy to do renovations in the evening. Every 10 dollars borrowed to do renovations becomes at least 20 dollars in increased home value when the renovations are finished, and as a bonus you get to live in the newly renovated house. You don't need to sell, instead take out another loan against your now more valuable house - the bank is eager to help. It's called a "real estate career". Compare that to working for a living as your "career": Every 10 dollars of productivity you put in for your boss turns to 7 dollars in wages and after taxes you have 4 dollars. Not to mention the taxes and tributes as a small business owner or independent. Which is the smart move? Which is the fool's move? If you talk to everyday people, what is their dream? What would they like to achieve? Will they say they want to invent something? Create a huge business? Become best in the world or at least in their region in some sport or hobby? Very few will answer this. Most will answer: "I want to own a bunch of condos and live on the rent". That is the dream.

Bukhmanizer 3y ago

No it won’t. This reads of straight fantasy. The idea that an extreme minority is going to panic the majority into selling at bargain basement prices is absurd. It’s far more likely that either 1. People simply choose not to sell their houses; as most people who own one or more homes have that option, or 2. The 64% of people buy the homes selling for cheap, and resell for a profit

palmer_fox 3y ago
My (very limited, admittedly) observation is that people who own multiple properties do not panic-react to the market changes. A great example of that is London, where a vast number of houses and flats are unoccupied and that doesn't seem to bother the very affluent class owning the properties.
- Bukhmanizer 3y ago
  Agreed. Largely because they have the capital to hold on to the property, and also for as long has anyone has been alive, in most places owning a house has been either a safe or unbelievably lucrative investment.
- vidarh 3y ago
  The notion of lots of empty houses and flats in London is severely exaggerated. Sure, there are some tiny areas where lots of owners are people who have multiple homes, and so spends little time each place. But most of London haven't got that much empty space. The London rental market is if anything completely overheating at the moment due to lack of supply.
  - palmer_fox 3y ago
    Both West London and (surprisingly) East London had many unoccupied houses a few years back. Even in areas around Hackney road / Bethnal Green, which I would guess are not even really investment properties but more like long-term wealth assets. Agreed on the overheated market. My argument was that these properties are completely off the market and the owners won't panic-sell them

satvikpendem 3y ago

As long as new supply is not being built, whether due to restrictive zoning, NIMBYism, or other such reasons, the bubble will not burst. Too many people simply want too few homes. The answer is to build high density housing in the places people want to live in, usually major cities.

LapsangGuzzler 3y ago
Which will not happen because of the NIMBYism you describe. Local and state governments tend to have a high representation of property owners relative to the folks who really need this change to happen. It's "F you got mine" applied to housing policy.
- 0xParlay 3y ago
  Also tragic is people without homes fighting a proxy war with “developers” because of their podcast centric understanding of economics. It’s more important that developers don’t make a profit than increasing the supply of homes and nothing will change their minds. If new housing supply has the word “luxury” in the name then lord help you. Gentrifying a community with new houses is like the worst thing a person could do.
iamdamian 3y ago
I'm very interested in the topic but skeptical of sweeping claims like this. What is the most definitive evidence (actual data plus analysis by economists) that you can point me to that proves this is true?
- jonhohle 3y ago
  It’s not true (at least not for the past 20 years nationwide). New housing has grown faster than population growth. In 2000 there were 113 units per capita vs 145 per capita today.[0] The average number of people per household hasn’t changed significantly since then, so there is technically 30% more housing available in the US than 20 years ago. Not all of that housing is where people want it, investors are collecting properties like Pokémon, the vast majority of people can only afford a house half the price they could before interests rates rose, and those with mortgages are stuck with their low rates and little incentive to move (or at least sell). So it’s not the lack of units that’s the issue, but a market that (surprise!) favors the wealthy and entrenched. If you had cash, houses could be found at absurdly low prices 12 years ago. But as always, the climate favored the wealthy whose credit score wasn’t wrecked, who had excess capital to deploy, and were willing to tie it up in real estate for 5-10 years as the market recovered. 0 - https://twitter.com/Econimica/status/1686999658483314688 https://twitter.com/Econimica/status/1686999658483314688

cogogo 3y ago

This smells a lot like when crypto people say their markets will affect greater financial markets. The scale is just not there.

simmerup 3y ago
In hot markets house prices are decided on the margins, so a small group of people can have an outsized input on prices
- cogogo 3y ago
  My comment was definitely flippant but in large metro areas airbnb at the margin leading to a rapid price increase is not the problem. It’s supply. No supporting evidence here because it’s pretty broadly available for many real estate markets.
  - bagels 3y ago
    If there is suddenly 5x the supply from airbnb divestment, it can move prices. It seems like the winning move is probably to just do a regular rental instead of selling though.

ilamont 3y ago

It's not uncommon to visit tourist-magnet cities and see entire buildings with only a few lights on, as many units are owned by the wealthy and left empty, as rents are not as important as having a safe place to "park surplus capital." Thousands of other units have been pulled from the long-term rental market to reap the higher returns of STVRs [short term vacation rentals]. In NYC, another sign of STVR buildings are lockboxes chained to metal railings outside. Starting tomorrow (September 5) such rentals are supposed to follow very strict new rules introduced by the Adams administration including hosts required to live in the same unit and reservation caps of no more than 2 people. Whole apartment rentals are banned unless the term is longer than 30 days. https://www.thecity.nyc/2023/8/15/23832212/how-new-airbnb-registration-system-works https://www.thecity.nyc/2023/8/15/23832212/how-new-airbnb-re...

palmer_fox 3y ago
Haven't heard of this change! Thanks for posting. Curious to see how this will affect the STVR market (even just the number of postings and their availability on AirBnb).
- ilamont 3y ago
  If the rules are backed by strong enforcement, it will gut the market and likely result in many airbnb investor-type landlords selling properties. Whether this leads to the "bubble popping" scenario described in the parent article remains to be seen.
  - palmer_fox 3y ago
    Someone mentioned in this thread that a likely scenario is these landlords switching to mid- or long-term rentals instead of selling. Which sounds very plausible to me, especially in a city like NYC, where the rental market is always hot.
Bukhmanizer 3y ago
> In NYC, another sign of STVR buildings are lockboxes chained to metal railings outside. Maybe as a correlation, but these lockboxes are used for everything in NYC, dogwalkers, nanny’s, house cleaners, apartment viewings, etc.

futureshock 3y ago

Housing is different than other kinds of assets because it is also essential for nearly everyone to have a home. Most people in the market for a home only have their paychecks and credit from the bank. Median wages are quite a bit lower than FANG salaries and banks only give credit to people with appropriate incomes buying appropriately priced homes. Governments also need to keep people in housing and voters will kick out any government that fails too hard at that. So unlike bitcoin, housing cannot stay irrational and divorced from fundamentals forever. Real people need to use real paychecks and actual local credit unions need to look at those purchases and see a safe bet. If that system stays out of whack for too long, everything collapses, the banks’ business model, the housing market’s prices, the ruling party’s majority, rule of law as the people resort to squatting and the capitalist system that failed in the simple task of keeping people out of the rain and cold.

nchase 3y ago

Dead for me - anyone have a mirror?

jppope 3y ago

Considering most of those houses in question here were bought at 3% interest rates it seems unlikely that the wealthy would sell at a loss rather than just switch from STVR to medium-term or long term rentals where they would make less money. The housing market is still short on supply and at the purchase prices/ interest rate combo they have a lot of room to be able to ride it out. Besides, its not residential homes that are a ticking time bomb, its commercial properties... Office workers are not going back to the office.

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drewg123 3y ago
I guess the question is how many of them were bought with ARMs, and when do those ARMs adjust?
voisin 3y ago
There are all sorts of renter protections that come into play once you are no longer a short term vacationer. I think these protections will turn “investors” off.
phpisthebest 3y ago
>>Office workers are not going back to the office. I am not seeing this. Major companies are forcing the issue, and employee can pound their refusal all they want but at the end of the day I think we not going to see a normal fully remote work force. At best you are going to see a hybrid where you get 2 or 3 days a week of WFH, and the balance in the office. Further from personal experience I somewhat agree with the management because I have seen LOTS of abuse of WFH from employees.
- tigeroil 3y ago
  At first I was concerned about abuse of WFH by employees too, but then I realised, people in the office often aren't particularly productive either. From my own team, if I had to guess, the actual number of productive hours are similar. Granted, I think it probably varies dramatically by company / team, and I get the impression that some places take WFH much less seriously than we do (as in, not goofing off).

blindriver 3y ago

I see a lot of Airbnb-hate online like reddit or Twitter, but financially I see no sign of Airbnb slowing down at all. It really just seems like a case of more light and no heat at this point.

lkrubner 3y ago
I think you mean STRs not AirBnB? STRs are still growing, but AirBnB is facing much more competition from VRBO and Booking.com and Google Travel then it has previously faced. When I consulted at https://futurestay.com https://futurestay.com I could see the income shifting from AirBnB to Booking.com.
- blindriver 3y ago
  Except all of Airbnb's financial metrics are up and to the right. The individual Airbnber might be having issues but Airbnb as a whole isn't.
itsoktocry 3y ago
The fact that it isn't slowing down is why all of the pushback and legislation is happening. Their finances will be a lagging indicator.

resolutebat 3y ago

Hugged to death, cache here: http://webcache.googleusercontent.com/search?q=cache%3Ahttps%3A%2F%2Fwww.oftwominds.com%2Fblogaug23%2Fairbnb-bubble8-23.html http://webcache.googleusercontent.com/search?q=cache%3Ahttps...

nerdbert 3y ago

> Here's how we can tell if a speculative bubble is a bubble: everyone says it isn't a bubble It's hard to argue with this ironclad circular logic.

scoofy 3y ago
I understand your point, and it is a heuristic at best, but I'm having more and more trouble listening to the ever-growing gymnastics explaining how prices will not come down even though mortgage rates have gone from 2.75% to 7+% in the last year-and-a-half. I have yet to hear a convincing argument beyond "people will just stop selling their homes, forever," which is obvious nonsense. Once the adjustable-rate mortgages reset in a year-or-five, many, many folks will be forced to sell. Prices only come down when people are forced to sell at a loss.
- pseudo0 3y ago
  Decreasing in real value, sure, but people hate the idea of a nominal loss when it comes to selling their house. And with inflation still higher than usual, it's entirely possible to have a 15-25% loss over five years in real terms while still looking like a wash on paper. That seems like a more likely scenario than an outright crash right now.

heurist 3y ago

STRs are still a small fraction of the total housing market, as are institutional investors. People need houses, this market is organic, though reacting to the massive flux in interest rates. Some data here: https://www.housingwire.com/articles/datadigest-inventory-and-the-purported-airbnb-crash/ https://www.housingwire.com/articles/datadigest-inventory-an...

cs702 3y ago

A key argument appears to be based on incorrect data. Specifically, as I write this, the OP states that the number of housing units per capita in the US is at an all-time high, per this plot (unless the OP changes it): https://www.oftwominds.com/photos2023/housing-per-capita8-23a.png https://www.oftwominds.com/photos2023/housing-per-capita8-23... Federal data shows otherwise. Here's the actual number of housing units divided by number of persons in the US: https://fred.stlouisfed.org/graph/?g=18r64 https://fred.stlouisfed.org/graph/?g=18r64 Otherwise, I'm reluctant to call the US housing market a "bubble," because I haven't seen the classic signs of financial mania.

oofta-boofta 3y ago
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Jeslijar 3y ago
Your fed link says it is an estimate. I don't know where this guy gets data but I don't think the availability is that far off from the peak. https://twitter.com/Econimica/status/1698596620022186428 https://twitter.com/Econimica/status/1698596620022186428 You're talking less than 2 percentage points with the fed estimate anyway right?

hn_throwaway_99 3y ago

> I also want to stipulate that I am not talking about people of modest means who acquired rental properties by scrimping and saving their earned income and making sacrifices for decades--a strategy that is part of Self-Reliance ; I'm talking about the already-wealthy who are seeking to "maximize returns" on their unearned "surplus capital." The mental gymnastics folks go through to say "this behavior is ok if people I like do it, but it's wrong when those other gross people do it" always amuses me.

delecti 3y ago
In stories like this, I think that sort of thing is less about mental gymnastics, and more about picking a less controversial target to make their point with.
- greenie_beans 3y ago
  yeah it's definitely intended to not alienate the audience
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inpdx 3y ago
While I cede your point to an extent, small time landlords are generally (1) small, local businesses, giving back to the local economy, and (2) very motivated to keep the places rented rather than sit idle. Which is to say at least somewhat invested in the community.
- hn_throwaway_99 3y ago
  I 100% agree, but the difference you are pointing out relates to how a landlord acts and works with the community, not how they became a landlord in the first place. There are plenty of "small time landlords" who simply inherited a house when their parents passed away and chose to keep it to rent out. The author of the article is implying we should demonize these small time landlords because they didn't "scrimp and save their earned income over decades" (even though their parents did).

crazygringo 3y ago

> A systemic driver of this bidding war for rental properties is the "AirBnB" model of monetizing individual properties to compete with hotels and resorts for lodging... This has led to an artificial scarcity of housing in popular tourist destinations. This is fundamentally untrue, there is nothing "artificial" whatsoever. AirBNB allows a city to host a larger number of tourists than hotels alone can provide, which stimulates the local economy with lots of spending etc. This is not "artificial", it's real local economic growth. The scarcity of housing is then not caused by AirBNB -- it's caused by not constructing enough housing. It doesn't matter whether demand for new housing comes from tourism or people moving to the city to reside. Demand is demand, and tourism is not "artificial". Nobody calls people moving to the city for work an "artificial" cause of scarcity, and neither is tourism. The solution is to build more housing. Period.

paulryanrogers 3y ago
This assumes the owners of the STVR units are local. My guess is the longer the phenomenon goes unregulated the more they're owned by distant rent seekers.
- crazygringo 3y ago
  If you're making a comparison, then you're assuming the owners of long-term residential buildings are local as well -- which they most certainly are not always. And I don't know why STVR owners would be less likely to be local than regular landlords. (And then if want to send money to hotels, remember those are almost always national chains!) But in any case no -- I'm talking primarily about the fact that tourists spend more on restaurants and attractions and shopping than locals. While I'm assuming that landlords just remain landlords.
  - paulryanrogers 3y ago
    Tourism is a double-edge sword. It prices out locals. Combined with unregulated STVR and some places become hollowed out shells, much like Venice.

ChumpGPT 3y ago

Has this guy ever been right? I just remember him writing about the coming housing crash for the last 15 years. It never manifested itself and just kept going up. He has never been correct in his predictions, so I would actually use him as a contrarian signal.

givemeethekeys 3y ago
This is the case for all financial doomsayers - they predict 100 of the last 5 crashes.
xhkkffbf 3y ago
Hah. I came here to post the same thing. He's definitely a permabear. I like some of his insights, but in the past he and his circle of friends have rarely been right. (Of course when they were, they were really right.)

mattbee 3y ago

1/100 UK properties is an (Airbnb) short let of some sort. But I don't buy that a few highly-leveraged people panic-selling their portfolios is going to bring down house prices at all. Even if that caused some _local_ downward pressure on house prices, why would that affect the demand for short lets? It might reduce the supply, so local room rates would go up. The remaining owners would have a lower-valued asset producing higher returns - a better return on a percentage basis, and in cash. Few people holding cash-generating property will be pushed into selling by a dip; lots of them will have held through 2007-14. Property value as investment is (still) a bit of a religion here. Councils and national regs have far more potential to dent Airbnb numbers (e.g. I'd guess we'll see sales tax added on nationally by the next government). But I don't see the political will anywhere yet, even in places like Edinburgh and London that have unusual regulation.

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amadeuspagel 3y ago

AirBnB is banned in many cities, and that doesn't make much of a difference. Urbanization is not slowing down, and that drives up prices if not enough housing is built. Popular Tourist Destinations tend to be places that people do not just travel but move to. > Here's how we can tell if a speculative bubble is a bubble: everyone says it isn't a bubble What an incredible sentence. Is a speculative bubble a kind of bubble? But then there's no need to tell whether such a speculative bubble is in fact a bubble. Anyway, we can tell if everyone says it isn't a bubble. Cars are a bubble. Lolipops are a bubble. Everyone says these things aren't bubbles, which means they must be.

tmaly 3y ago

My city just did a revaluation at peek prices using comparable sales. The state requires a revaluation every 10 years. This is going to create some other problems if the housing bubble does burst. The city has kept increasing the budget year over year. They are banking on these huge valuations to fund all sorts of spending. At the budget meeting, elderly people were speaking up on how they cannot afford the tax increase.

scoofy 3y ago
>At the budget meeting, elderly people were speaking up on how they cannot afford the tax increase. Property taxes are the only taxes that, by definition, the owner of the property can afford. The elderly people only mean that they "can't afford" their property taxes without changing their lifestyle in any way. To be fair to them, it's certainly challenging and uncomfortable, however, this is a consequence of their own making. None of them were complaining during the 30 years of their property values were going up as supply became more and more stifled.

gremlinsinc 3y ago

Cheers to that. IF the housing bubble pops, perhaps all the airbnb's revert back to actual long-term housing and the housing crisis / crazy rental market fixes itself. Capitalism, just fixing itself. Nothing to see here, no reason to worry.

fieldbob 3y ago

Booking and airbnb pushing prices all over the planet Ive been there I tried that Now a days I a bring a tent cuz I love waking up on a beach or on a pastureland with cows on the country side in the morning. You can also rent a cheap combi car and use it as a tent o vacation and go anywhere.

diogenescynic 3y ago

I think a lot of the economy/stock market has been juiced by people refinancing their homes as prices went up and using that money to buy second homes, new cars, remodel their homes, new phones, etc. Now that rates are higher, I think the rest of the economy will cool off as people can't use their homes as ATMs which will lead to a consumer spending slow down which will lead to a stock market correction which will lead to layoffs and finally start forcing more real estate transactions.

mancerayder 3y ago

So on the topic of NYC, and the new registration laws coming into effect tomorrow. From Bloomberg: "At stake is potentially millions of dollars in lost revenue for Airbnb in one of its biggest markets. Some 7,500 units don’t meet the requirements to apply for a license, according to market analytics firm AirDNA, and so will likely eventually disappear from the platform. More than half of those listings are frequently rented and account for about 40% of Airbnb’s income in New York City, according to AirDNA. In a lawsuit against the city over the rules, Airbnb said it earned $85 million in net revenue in 2022 in the Big Apple, which is about 1% of its total. New York has been sparring with Airbnb for years over rules that prohibit rentals in most apartments for fewer than 30 days without a tenant present. AirDNA estimates that only 9,500 of Airbnb’s 23,000 listings are legal." Will that few units (out of a city of 8.5M) coming back online really pop the housing bubble?