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Is your hypothesis that supplying more rental units (even if they were mostly short-term) would not reduce the both the price and profitability of that stock?

Is your hypothesis that supplying more rental units (even if they were mostly short-term) would not reduce the both the price and profitability of that stock? And, that an increased supply and reduced profitability would not drive some of that short-term rental stock into the long-term rental market? It appears to be the consensus opinion of HN that reducing supply increases availability and/or affordability. Howso??

franga2000 2y ago
The goal is to add more supply to the long-term rental market and drive costs down, right? That's (part of) how you solve a housing crisis. The AirBnB market is much more profitable than rentals, so all investment is going there and many flats are even being converted. By incentivising AirBnB, you're driving the supply of flats down as they are converted and the all the new supply that is created goes straight to AirBnB. The theoretical point of oversaturation when AirBnB supply starts leaking back into long-term rentals would only happen if the number of investors was infinite and prices were set by a perfect inverse relationship to supply. In reality, neither of those assumptions hold. Investors are finite and their number decreases with profitability, which is inversely proportional to supply, so it's unlikely they'd ever reach oversaturation. And AirBnB prices don't decrease linearly with supply, most people just look at what they'd make with long-term tenants and set their price so they end up with some margin more than that... For a (slightly gruesome) analogy: You have a leech. You want the leech to drink even more blood, until it finally fills up and your circulation reaches an equilibrium. Until that happens, you're bleeding out and you probably won't survive. Why not just cut the leech off?
- pjkundert 2y ago
  Units that this “rent control” scheme disallows (source; direct, personal knowledge of individuals experiencing each of these scenarios): - Studio apartments that are rented to visitors in the summer, and students in the winter. - homes that the homeowner can vacate during the summer tourist season, and either occupied or rent in the winter. - Homes, which can be divided into two or more Airbnb, that the owner can can vacate because they have a second home. - all construction made possible to marginal borrowers, that was rationalized by the potential for Airbnb income in a pinch. - construction of hotel and apartment units, prevented due to that possibility of further legislative interference by government. - Loss of productive, wealthy, citizenry who could build, who can move to more business favourable jurisdictions at will. But, you’re willing to bet that none of these will occur, and that the market will not respond to vastly increased housing unit supply with lowering prices and increasing availability. Is this a bet that you’re really willing to make?

franga2000 2y ago

The goal is to add more supply to the long-term rental market and drive costs down, right? That's (part of) how you solve a housing crisis. The AirBnB market is much more profitable than rentals, so all investment is going there and many flats are even being converted. By incentivising AirBnB, you're driving the supply of flats down as they are converted and the all the new supply that is created goes straight to AirBnB. The theoretical point of oversaturation when AirBnB supply starts leaking back into long-term rentals would only happen if the number of investors was infinite and prices were set by a perfect inverse relationship to supply. In reality, neither of those assumptions hold. Investors are finite and their number decreases with profitability, which is inversely proportional to supply, so it's unlikely they'd ever reach oversaturation. And AirBnB prices don't decrease linearly with supply, most people just look at what they'd make with long-term tenants and set their price so they end up with some margin more than that... For a (slightly gruesome) analogy: You have a leech. You want the leech to drink even more blood, until it finally fills up and your circulation reaches an equilibrium. Until that happens, you're bleeding out and you probably won't survive. Why not just cut the leech off?

pjkundert 2y ago
Units that this “rent control” scheme disallows (source; direct, personal knowledge of individuals experiencing each of these scenarios): - Studio apartments that are rented to visitors in the summer, and students in the winter. - homes that the homeowner can vacate during the summer tourist season, and either occupied or rent in the winter. - Homes, which can be divided into two or more Airbnb, that the owner can can vacate because they have a second home. - all construction made possible to marginal borrowers, that was rationalized by the potential for Airbnb income in a pinch. - construction of hotel and apartment units, prevented due to that possibility of further legislative interference by government. - Loss of productive, wealthy, citizenry who could build, who can move to more business favourable jurisdictions at will. But, you’re willing to bet that none of these will occur, and that the market will not respond to vastly increased housing unit supply with lowering prices and increasing availability. Is this a bet that you’re really willing to make?