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There is a fundamental problem with your argument. The condos and apartments people rent out on Airbnb are built by developers. So as Airbnb becomes more popu

There is a fundamental problem with your argument. The condos and apartments people rent out on Airbnb are built by developers. So as Airbnb becomes more popular, developers will recognize the ability for tenants to profit from renting out units. In response, they will try to capture that profit on the front end by raising the selling point of the unit. Practically, the increases in property value Airbnb generates will ultimately flow back to developers, and make housing less affordable. It's a double whammy for the people that are buying units and not renting them out, because they now have to more for units that don't want to rent out. Edit: Also, the U.S. real estate stock depreciates by 3% annually, so it ultimately will have to be replaced with new units.

grandalf 12y ago
You are correct that AirBnB increases the value (and thus the price) of housing units. However this does not refute his argument. Since AirBnB allows the rental of full units, individual rooms, and even shared rooms, it makes housing more affordable. Now, someone can afford a 2BR and plan on renting out one of the rooms a few nights a month to help afford the rent. If there were massive competition, the price of renting a room on AirBnB for one night would approach 1 30th of the monthly rent price. Right now people typically rent a flat for one year. Why is that? Why not rent an AirBnB for 3 months and then try living in a different neighborhood? All these options are enabled by AirBnB and all of this extracts more value from existing infrastructure.
- johnnybazooka 12y ago
  Right, it makes existing infrastructure more affordable. But for new infrastructure, any income generated is priced into the value, making the "profit" from renting it out less substantial.
  - grandalf 12y ago
    That may be true, but why would anyone invest in new infrastructure if it didn't seem like a better option than buying existing infrastructure? Both alternatives include the additional value that AirBnB creates and I'd expect both to result in increased investment in housing across the board, both new construction and improvement.
  - seanflyon 12y ago
    You are ignoring the concept of competition. Housing is not the most competitive market due to restrictions both natural (limited space) and artificial (zoning), but there is still competition.
    - johnnybazooka 12y ago
      See that's my point... there is only so much land in the middle of NYC that is zoned right for condos, so the competition really won't increase. Also, real estate in general is a very capital intensive industry, which takes out 99% of competition anyways. How many people are there that can raise $200 million to build a project. Not many.
      - seanflyon 12y ago
        > How many people are there that can raise $200 million to build a project. Not many. First, you don't need many for competition; you just need a few. Second, there are lots of people who can raise a mere $200 million.
        johnnybazooka 12y ago
        "mere $200 million" lol ok
        seanflyon 12y ago
        Welcome to the world of finance.
netcan 12y ago
That's taking it deep. Luckily most of our economies run on price systems. :) First, just because you're making more doesn't mean developers can charge more. Building is a fairly competitive industry. Land is usually the thing that can increase in value in response to rising demand. Overall when thinking about housing prices the thing to consider is supply. Housing stocks take time to build up and there are all sorts of forces preventing them from increasing. That's really a different discussion but my personally opinion on it is that housing costs go up where and when the government and the citizenry want it to. Rising house prices are a weird pathology. They help credit markets, which everyone is fond of (banks, developers & home buyers directly; retail and any consumer spending focused industry indirectly). Homeowners feel wealthier when their property increases in value, even though the house is still the same house and they have no way of realizing those gains without moving to a different town.

grandalf 12y ago

You are correct that AirBnB increases the value (and thus the price) of housing units. However this does not refute his argument. Since AirBnB allows the rental of full units, individual rooms, and even shared rooms, it makes housing more affordable. Now, someone can afford a 2BR and plan on renting out one of the rooms a few nights a month to help afford the rent. If there were massive competition, the price of renting a room on AirBnB for one night would approach 1 30th of the monthly rent price. Right now people typically rent a flat for one year. Why is that? Why not rent an AirBnB for 3 months and then try living in a different neighborhood? All these options are enabled by AirBnB and all of this extracts more value from existing infrastructure.

johnnybazooka 12y ago
Right, it makes existing infrastructure more affordable. But for new infrastructure, any income generated is priced into the value, making the "profit" from renting it out less substantial.
- grandalf 12y ago
  That may be true, but why would anyone invest in new infrastructure if it didn't seem like a better option than buying existing infrastructure? Both alternatives include the additional value that AirBnB creates and I'd expect both to result in increased investment in housing across the board, both new construction and improvement.
- seanflyon 12y ago
  You are ignoring the concept of competition. Housing is not the most competitive market due to restrictions both natural (limited space) and artificial (zoning), but there is still competition.
  - johnnybazooka 12y ago
    See that's my point... there is only so much land in the middle of NYC that is zoned right for condos, so the competition really won't increase. Also, real estate in general is a very capital intensive industry, which takes out 99% of competition anyways. How many people are there that can raise $200 million to build a project. Not many.
    - seanflyon 12y ago
      > How many people are there that can raise $200 million to build a project. Not many. First, you don't need many for competition; you just need a few. Second, there are lots of people who can raise a mere $200 million.
      - johnnybazooka 12y ago
        "mere $200 million" lol ok
        seanflyon 12y ago
        Welcome to the world of finance.

netcan 12y ago

That's taking it deep. Luckily most of our economies run on price systems. :) First, just because you're making more doesn't mean developers can charge more. Building is a fairly competitive industry. Land is usually the thing that can increase in value in response to rising demand. Overall when thinking about housing prices the thing to consider is supply. Housing stocks take time to build up and there are all sorts of forces preventing them from increasing. That's really a different discussion but my personally opinion on it is that housing costs go up where and when the government and the citizenry want it to. Rising house prices are a weird pathology. They help credit markets, which everyone is fond of (banks, developers & home buyers directly; retail and any consumer spending focused industry indirectly). Homeowners feel wealthier when their property increases in value, even though the house is still the same house and they have no way of realizing those gains without moving to a different town.