I strongly believe, that we should help people buy their first home and increasingly tax the second, third etc. In several developed countries, it's very lucrative for rich / upper middle class people to use their credit capability to just buy another house and rent it out - with tax incentives and deduction, it basically pays for itself over time. While the young renter who is living in it, do not have this possibility.
If someone can't find a house because there are short-term rental properties, the solution isn't to force someone to give up their STR, it's to build another house.
I absolutely recognize that short-term rentals have other undesirable effects on a neighborhood or building: noise, constant random strangers in the building/area, etc. I think those are reasonable reasons for banning or restricting STRs, but "housing shortage" is not among them. If you have a housing shortage, the solution is to build more housing, full stop.
We would need 'China style' decisions - which ended up with building so many apartments, that they end up with a significant percentage of them being empty, and the ripples of those decision will crush their economy for the years to come.
The music has stopped. It will take some time, but the outcome is almost inevitable.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Cars are a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to chip shortages in the pandemic), but outside those no one really complains about a “car crisis”. There are new and used cars available at very many price points, old vehicles get retired and new ones are manufactured, etc.
In housing, one major reason we don’t “just build more” is precisely because of regulation that either prevents housing construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct vacant apartments — we have plenty of companies and individuals willing to build, we just need to let them.
Your example perfectly supports that!
Central planning is kind of where we are now already — transportation options are severely restricted, transit costs are subsidized in some areas for some people but not others, etc.
Competitive markets in general are pretty good at matching supply and demand, even when demand is pretty all over the place.
Housing is a great example in the US — sure, there are times when prices go haywire from supply shocks (e.g., due to mortgage bubbles or material shortages in the pandemic), but outside those no one really complains about a “housing crisis”. There are new and used houses available at very many price points, old buildings get retired and new ones are manufactured, etc.
In transportation, one major reason we don’t “just build more” is precisely because of regulation that either prevents rail construction outright or makes it very expensive, nominally in the public interest. We don’t need state owned enterprises paid to construct unused trains — we have plenty of companies and individuals willing to build, we just need to let them.
In Spain, there was high demand for property prior to 2008. In areas in the UK, there was high demand for property across most of the country. Then credit became harder to get after the GFC, and suddenly the demand just wasn't there. In Spain, property prices in many area more than halved within a year. What happened? Suddenly everyone moved out? No, the demand was just demand from a different source.
Actual house price increases outstripped rent increases by multiples, but suddenly all of that demand to own just disappeared when the credit driven boom went bust (not everywhere).
There is often more to it that just build more.
The base demand for housing compared to supply in the UK is that much worse.
We have a housing crisis because restrictive zoning codes prevent housing density from rising to meet demand. The market is not being allowed to work properly, and has not been for decades now in many places, so we have accumulated a huge backlog of unmet demand.
It's a very good business. In many developed countries, there are very strong incentives for owning several properties. Once you've reached a certain level of wealth, it's basically free for your - since you're buying it with a mortgage. And quite often you can deduce the interest paid, from your taxes. We are effectively subsidizing this behavior, instead of taxing it.
Simplifying a bit - you want to put 100k$ to work, and you are wealthy enough so that the bank will lend you whatever you want. A great business is to buy another home, for say 500k$ - the rent and tax deductions will cover your mortgage, so you effectively turn 100k$ to 500k$ over the span of the loan. It's basically using your leverage, which first time buyers simply cannot most of the time. It's an unfair game.
In short - the system should be set up in a way that owning a second home should not be a good financial decisions - it should be an expensive decision. If you're rich enough and want to own a second holiday home - no problem. But in the current state of affairs, it's not expensive - it's actually profitable to do that.
Anyway, short-term rentals are basically a symptom of making it hard to build hotels. Most of the time staying at a hotel is much more comfortable than staying at an airbnb.
Sometimes! If I'm staying in a place for more than just a few days, I want a full kitchen. That's pretty rare to find in a hotel. Even small efficiency kitchens are pretty rare. And in most markets I can rent an Airbnb with a full kitchen for much cheaper than a hotel room with any kind of kitchen.
Beyond that, I generally prefer the Airbnb experience over that of a hotel. I know I don't speak for everyone there, but I think there are quite a few people with my preferences.
Is that possibly because it is so hard to build hotels, though?
It's trivially easy to see that this isn't true: you probably don't live in a hotel (or a structure resembling one), for example. Why not? The answers to that question generalize to travel.
Hence why most Western countries have jacked up interest rates, and will have to keep them quite high for the next several years.
1. THERE IS A LABOR SHORTAGE IN CONSTRUCTION
2. ZONING WILL NEVER BE REFORMED AT THE LOCAL LEVEL
3. EVERYONE ASSUMES THE PRICE OF HOUSING WILL CONTINUE TO GROW MORE THAN INFLATION
All 3 highlight a broken market due to inflated costs. The only solution is to slow the market down and play chicken with owners.
> pulling the ladder up and further securing the position of those who got there first
Such is life. You can't drastically change a market overnight. You'll get voted out of office.
Welcome to the late 70s. This is how it was then too. Be happy we don't have a Volcker
We've done it once before (World War 2 - in that case it was even retroactive, so you couldn't hike rents in anticipation), and it increased homeownership rate by the highest rate in the 20th century (something like 5% jump in a few years) by making leasing less profitable than selling.
Would also have to be combined with more building, but it does work. If you make investing in real estate less appealing (via rent control), people will sell - unless they're just hiding money (i.e. overseas investors).
You would probably have to go on a crusade in order to promote it, and it would require a massive anti-landowner propaganda push (of the sort that existed during WWII), but it's theoretically doable.
> it's theoretically doable
So is a constitutional amendment banning sloppy blowjobs but that is completely unrealistic.
Jesus HN has gotten dumb.
[0] - https://openscholarship.wustl.edu/cgi/viewcontent.cgi?articl...
I mean that’s the theory, right? It’s never been truly tried?
I would even tie some portion of primary home property tax to the density of people living on a lot.
One avenue is stronger property rights. Don't let local governments and randos have an opportunity to make demands or issue denials.
It took me nearly four years to get approvals and permits to repair an existing home in California. Building a new one seems impossible.
"New York University economics Professor Edward Wolff, a specialist in real estate statistics, said 4.48 percent of American households owned three or more residential properties in 1998, compared with fewer than 1 percent in the early '90s."
I wonder what that number is today...
This isn't the cause everywhere. There are absolutely places that don't have such overbearing regulations but still have a serious housing shortage.
This was for a deck that was going to be used by 1-2 people at a time, that could be built for $1000 worth of materials.
Same thing doubly applies for housing, except the numbers are 10-50x higher, because Karen in Bumfuck Permitting Services can't fathom that it's not necessary to build a single family dwelling up to Fort Knox standards, especially when it's made out of sticks and drywall anyway. It's almost like the code is designed to be especially convoluted to be a make-work program for local contractors.
But it was just an example of a thing that can contribute to rising construction/housing costs. I don't think it's particularly helpful to tell a young person "whoopsie, we could have built housing for you, but thanks to the last 10 recent code updates, the house is now 2x as expensive and you can't afford it".
About three or four builders, but not many more.
The "character" they want to preserve is not that of an urban center with multi-family housing.
More housing would deflate investment portfolios built on the premise of limited supply to inflate prices.
It’s intentional manipulation of agency to service hallucinated social memes.
2. A private company in San Francisco was going to buy a downtown office building and converted into housing, hoping that even though that is incredibly expensive there would be enough demand. But then they realized that San Francisco had mandated a large percentage of new multifamily housing units must support low rent tenants and it made the whole project completely infeasible.
Zoning, on the other hand, that keeps corner stores, apartments and condos out of some neighborhoods... that is a huge problem and doesn't really exist for safety reasons.
It's all those things. Stop looking for a single explanation. That's not how the world works.
> overburdening regulation.
Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
Yes, it is all those things. They all contribute some non-zero amount.
But if you just build more housing, those other things end up not mattering.
Consider:
There are too many short-term rentals, and people can't find houses to buy -> Build more housing, problem solved.
Too many people own second homes, and people can't find houses to buy -> Build more housing, problem solved.
Rich people / foreigners / private equity are buying up housing, and people can't find houses to buy -> Build more housing, problem solved. (This one also solves the cause as well; if there's enough housing -- because you keep building -- this housing becomes less attractive to rich people / foreigners / private equity, because they don't envision a return on their investment that's worth it.)
> Last two times my country tried to cut out the red tape it ended up costing trillions in fixes, and meant fewer builds in the end. Building regulations are good, there is a reason they exist.
Those aren't the kind's of things the GP is talking about. Safety standards are of course something we should not relax. What we're talking about:
* Restrictive zoning (e.g. "only single family homes", "no street level retail", "max height two stories", "must have parking for N cars per household", etc.).
* Allowing people who live nearby to object to construction on any grounds, which kicks off months (or years) of hearings and legal fights, that often results in projects being greatly scaled down or cancelled. (Ultimately, the homeowners just don't want more housing because they fear it will affect their own property values. Pretty much everything else is just an excuse to attempt to avoid sounding greedy or classist.)
* Laws like the CEQA (California Environmental Quality Act) -- a reasonable law with good intentions -- that is abused by other homeowners to tie up development projects in court.
* Capricious city planning departments that can hold up or deny approval for arbitrary reasons having nothing to do with building codes.
* Long permitting processes that are necessary, but the bureaucracy spends more time than necessary.
All of this ends up killing projects, or making projects prohibitively expensive. If you're a developer looking to build a condominium building, even though the actual build might only take 6 months, you will have to factor in legal costs, and just the cost of sitting around doing nothing for possibly a year or more (while the loan you took out to buy the land still needs its interest payments) before you can start building. And that's if you're lucky; maybe your project gets cancelled, or maybe it gets scaled down to the point where it's not financially feasible at all. And if you do finally get approval and finish your build, you now have to sell the units at what many would consider "luxury" prices, because your costs to build ended up being far higher than they needed to be.
If they actually cared, then they'd be complaining about the particular onerous regulations and why they shouldn't exist. Rather than just complaining about "regulations" in general, ignoring why such things are necessary.
We already rely on market forces to ensure that everyone doesn’t just move to one of a few popular cities. We don’t just need more housing, we need them specifically in Seattle, SF, LA, Denver, Manhattan places where people want to live. I still don’t see how SF achieving Manhattan density would cause its prices not to be Manhattan comparable. Something else is going on with increased supply having the ability to induce even more demand.
Overbuilding is also a danger. Berlin had excess capacity of housing and work space for a couple of decades before demand could fill it. Just because there is demand today doesn’t mean there will be demand when your project is finished, eg interest rate increases can put a damper on speculative demand. A Japanese style mega property crash is something no one wants to deal with.
Also, the Chinese have been simulating the housing sector to encourage domestic growth. The Chinese housing sector did not grow out of control just due to lack of regulation. It was also financial stimulus and incentives to encourage building.
So, you just pounced on that other commenter, accused them of something they didn't say, and despite believing that you understand the Chinese housing market you actually have no clue. You are literally the Dunning Kruger effect manifest info a hacker news commenter.
I said the problem in China is speculation, they don’t have a housing shortage. You can’t just build your way out of a housing problem if the demand signals are messed up.
My armchair economist opinion is that we are still dealing with the effects of the 2008 housing crash.
Why not add more meat around the bone while criticizing others for not doing so?
Option B: Housing shortages are caused by a combination of factors that include public policy, and solving the problem requires understanding and considering all of them.
It is not short-term rentals, it is not individuals owning too many houses, it is not rich people moving in to a neighborhood, it is not Chinese money fleeing the PRC, and it is not private equity "commodifying" housing.
It is that we suppress the construction of housing through to byzantine permitting, incredibly harsh zoning, vetocracy, and overburdening regulation.
This shortage is at the core of so many of our woes, homelessness being the most visible, but it really underscores _the entire economy_.
I created some slides over a year ago to present to friends and colleagues how I view the problem, you can peruse at your leisure: https://docs.google.com/presentation/d/1O1_oW0Ci2SJEIIhXzuzV...