Out of all the misdiagnoses of the housing crisis, this is the one I appreciate the most due to its adjacency to the truth.
By blaming AirBnB as the root cause, you're implicitly admitting that the problem is too little housing supply.
Great. So how can you increase housing supply? Your solution would be to ban AirBnB, which frees up only less than two years worth of new housing stock, while simultaneously reducing tourism revenue. This is a temporary and non durable solution that solves none of the underlying problems that will lead to a lack of supply 5 or 10 years down the road.
The durable solution is to increase housing starts by deregulation and financial incentives or public housing. If you double housing starts, in a decade you would have to ban more than five AirBnBs worth of houses to break even. This is the durable solution.
We fixate on the easiest things to fixate on, and it becomes an easily attacked effigy for the real problem.
When I lived in Mexico City, my friends would complain about gringos causing an increase in rents when the places they wanted to live for cheap were populated almost entirely by every Mexican who makes more money than they do.
Yet there was this implication that if you could somehow shut down gringo tourism, there would be no competition for living in the nice apartments in the nice neighborhoods. They would be desperate for your 2000 pesos or something.
This sentiment is certainly true in some places, but Mexico City is so big and with such a huge permanent population that tourists will only ever be a drop in the bucket.
>The durable solution is to increase housing starts by deregulation and financial incentives or public housing.
I think that there is a negligence of the economic conditions that face the construction industry in this and most similar arguments. Construction tends to be a pain point for costs, yet it is almost universally seen as a bad career. How can we reconcile this?
It's a boom-and-bust industry. Some years there is more work than people can handle, others they are struggling to get paid. Part of the solution should be to try to level out the cycles by building public housing when there is a downturn, and pulling back when there is not.
However, this is basically opposite of the cycle of populist demand for public housing, which tends to spike when prices are high and taper off when they go down. I don't have the deep knowledge of economics to make this argument robust, but what I think I'm aiming at is a sort of Keynesian approach to construction policy.
The inflation of labor and construction materials is reducing housing starts, but we must contextualize it -- what matters is not just the cost of construction but the ROI. Cost contributes to ROI but it isn't the only component.
If it was possible to build in the most high-value areas, the high ROI would justify private capital inflows despite the high construction costs. But planning in high-value areas is dominated by NIMBYs like Marc Andreessen lobbying their local government, so approvals happen in low-value areas where the construction costs dominate the ROI equation, which depresses housing starts.
But you are right that more should be done to reduce labor input costs for construction. That can only help the situation.
It’s actually worth stepping back a bit because everyone has a cause and everyone has a solution.
Short term lets, landlords, corporate investors, foreign investors, property speculators, immigrants… are all soaking up the supply of housing and pricing locals out of an area! Fix it by banning the lot of it!
The other argument is always that none of that really matters, just build more houses okay? Millions of ‘em. Deregulate, reform planning, do whatever it takes.
Looking at the bigger picture you’d want to tackle both the demand and supply side. Housing is for living in, not investment, so disincentivise foreign investment, corporate landlords, buy to let, etc. and basically make it less attractive than other forms of investment.
This would help in a city like Barcelona because housing density is already high and frees up existing supply that can be occupied by locals once more. You might find a place in Poble Nou or Gracia again instead of having to trek out past Sant Cugat.
Similarly, houses need to be built and in many cases NIMBYism or planning regulation gets in the way of that. But another challenge is building the workforce to build not just the homes but the town infrastructure around them, as well as the incentives for businesses to do that as you say.
If you don’t tackle the issue on both the demand and supply side at the same time then I feel like you just end up where we are now, where lots of houses and flats are built but either unaffordable or snapped up by the wealth class as an asset.
> By blaming AirBnB as the root cause, you're implicitly admitting that the problem is too little housing supply
The housing supply was not little before AirBNB and investment companies and digital nomads appeared on the scene. Why should a country have to build housing to satisfy the profit demands of such segments?
By blaming AirBnB as the root cause, you're implicitly admitting that the problem is too little housing supply.
Great. So how can you increase housing supply? Your solution would be to ban AirBnB, which frees up only less than two years worth of new housing stock, while simultaneously reducing tourism revenue. This is a temporary and non durable solution that solves none of the underlying problems that will lead to a lack of supply 5 or 10 years down the road.
The durable solution is to increase housing starts by deregulation and financial incentives or public housing. If you double housing starts, in a decade you would have to ban more than five AirBnBs worth of houses to break even. This is the durable solution.