Cities that have almost completely banned Airbnb (e.g.: NYC) have not seen any improvement on affordability. What's next?
Housing and rent are already heavily regulated in Spain. Some regulations and side effects of those regulations:
* Minimum contract length of 5 years.
* Maximum increase of rental per year regulated to 2/3% (even during high inflation years).
* It can take years to evict a non-paying tenant. If there are children in the apartment, it's even harder.
* Even if the tenant is not paying, you, the landlord, have to keep paying the utilities, because if you stop paying, you'll be charged with "coacciones".
* If the landlord is not a person but a company, regulation is even harder.
* In some cities like Barcelona, regulation goes beyond. Maximum prices set by the local government, seasonal contracts banned, and even room rentals regulated.
* And all that is not going into detail of the "Okupa" problem.
> Cities that have almost completely banned Airbnb (e.g.: NYC) have not seen any improvement on affordability. What's next?
New York, as expensive as it is, is still considerably cheaper than cities like SF. Part of this is that they build more, part of it is that they have a usable train system, which allows people to live more spread out across the city, but part of it as well, is that they've banned airbnb. It would be ideal to also see empty unit taxes on units >$10m (inflation adjusted). It would also be good to see high taxes on sales of units >$10m (inflation adjusted).
> Minimum contract length of 5 years.
This is good, assuming it's one sided (the tenant can choose to move out, but the landlord can't break the lease). People need stability in housing more than landlords need to be able to end leases.
> Maximum increase of rental per year regulated to 2/3% (even during high inflation years)
Sure, it should be generally tied to inflation, but what other investment exists where you're guaranteed yearly increases? Why are people so adamant that landlords need to be guaranteed minimal increases in their profits?
Housing is a natural monopoly, and allowing businesses to maximize their profits, unchecked, isn't capitalism.
> It can take years to evict a non-paying tenant. If there are children in the apartment, it's even harder.
This is often brought out as a massive negative of regulations, but let's be honest, this is an outlier. Without tenant protections, however, it's common for landlords to evict tenants to increase rents. Even with protections, landlords still take illegal measures to try to evict tenants to increase rents, like doing constant construction at night, or refusing to do maintenance.
This is basically the same complaint about welfare programs. We have to accept some percentage of fraud to serve the greater good.
It's completely normal for most businesses to take a risk based approach to fraud, to maximize profits. Retail businesses, for example, will try to maximize their credit card auth rates, even though that may increase their fraud rate, if the increases in auth rate outweigh the cost of the fraud.
A stable society is worth a small percentage of fraud.
> If the landlord is not a person but a company, regulation is even harder.
Good. I don't see how this is a downside.
> Maximum prices set by the local government, seasonal contracts banned, and even room rentals regulated.
Again, this is good. If there's a housing crunch, then residents should be prioritized over tourists.
We do agree. The desired objective of the regulations I mentioned is good. It's a good thing to have some stability as a renter, to not be kicked out and on the streets if you have children and cannot pay the rent, or that yearly rent increases are small enough that renters don't feel asfixiated.
However, we should not only consider the stated objective of the law but the real consequences of them. My point is, housing and rents are quite regulated in Spain. More regulation is being added every year as it serves the political and electoral objectives of our leaders, yet the situation is getting worse. Regulation detached from practical realities will fail to reach the desired objectives.
While I do agree with your opinion, I think the opposite is also true. It feels good to believe you didn't get there because "The game is rigged", "You have to be born lucky", "The house always wins", etc, etc. This defeatist/powerless way of thinking may in fact make it worse for you. When hope is lost, what's left?
That is what all societies are finding out right now. Before, they could count on women having babies providing a need to hope, but now that children are optional, societies don’t seem to have a replacement mechanism.
I think you and the parent comment are confusing the term "liberal". He refers to "liberal" in the classical sense: free markets, limited government, rule of law, etc. You mean "liberal" in the North American sense: lefty, social justice, etc.
You are disregarding supply and demand because it's not a 100% bullet-proof model that can predict all price movements in all markets, times, places, or any combination of factors, and at the same time are introducing your own imperfect models and formulations:
> For example: more supply can generate more demand. Demand can be inflexible with respect to supply. Supply and demand are unstable and can change unpredictably. In a monopoly situation price can be manipulated. Short term large supply can hamper long term.
Any model that tries to predict human behaviour will be imperfect, we all know that.
There is hardly a monopoly of housing in Spain, if we keep the current disconnection between supply and demand, prices will for sure keep increasing. There is evidence that building more reduces prices. It's not the only condition needed to reduce prices, but it's an important one:
> You are disregarding supply and demand because it's not a 100% bullet-proof model
I didn't any suggestion to "disregard" the "law of supply and demand". I saw a suggestion that whatever kind of "law" this is, it is a very different kind of thing than a law of physics, to which a comparison was being made.
> Any model that tries to predict human behaviour will be imperfect, we all know that.
Yet we can rarely even bound the actual scale of the imperfection, so discussing "laws" of economics as if they are in some way similar to the law of gravity seems a little silly.
> You are disregarding supply and demand because it's not a 100% bullet-proof model
OK. Can you provide me just one example of a large city that reduced the housing sale prices by building more dense units? Not by crashing its economy or otherwise decreasing the population.
If your model is correct, there should be at least _some_ examples.
> There is evidence that building more reduces prices.
There is none. Your studies are basically nonsense. Here's the strongest result:
> One study cited in her report found that the average new apartment building lowers nearby rents by 5 percent to 7 percent “relative to the trend rent growth otherwise would have followed”
Translation: the prices grew, but we managed to P-hack a small subset of data that shows at least _some_ effect. They could not find actual _decreases_ and had to resort to "would have beens".
Nope. Rents dropped because the _population_ in Austin dropped. It has recovered to 2019 level only the last year and is still below the peak 2020 level (stats are taken at Jan 1).
Hard banning Airbnbs will for sure push long-term rent prices down, but not by an amount enough to make them affordable. We already have evidence from cities with active bans. Prices in NYC or Lisbon have not come down significantly.
We still have to wait a few years to see the real effect that bans have on prices. Lowering prices at most 3-5% by banning Airbnb won't make anybody happy and will come with some negative effects like reduced tourism (and other economic activity), which is a very important part of Spain's GDP.
Regarding tourism, I think airbnb encourages mainly poorer tourists, who just eat food, drink mostly water and take pictures.
If you want $$$ from tourism, you have to find ways to attract the rich.
D'oh!
The rich don't necessarily like their destinations touristy. They don't like to elbow their ways through crowds, stand in lineups, or have stranger "extras" in their pictures.
Another problem is AirBnB almost by definition are less dense than hotels.
If there were no AirBnB, the economics for a new high-rise hotel would be much better.
But it all comes down to increasing desirable supply (which may be density dwellings at the end of an express train) or building entire new cities (or rejuvenating others).
At some point, if supply outstrips demand, prices will start to stabilize - maybe fall.
Tourism is by definition a small fraction of overall global economic activity. Basically the only places which can really run on tourism have major geographical (Barbados, Andorra) or extraordinary historical (Venice, Kyoto) advantages, or both (San Francisco, Cusco).
My recommendation is that if you want to encourage tourism, change your mind. Build a great place to live and if you do a good job, you might get a boost in a century. I would call this "the Chicago model".
The fundamental issue cannot be ignored: supply and demand. Spain population has increased by 2 million in just 2 years, far outpacing residential construction. Right now, the system excludes those who cannot afford the ever-increasing rents. Rent control, although well-intentioned and a very popular policy, has numerous negative effects supported by a variety of studies both in Spain and abroad. Rent control or any other alternate system to allocate the scarce units will leave many without access to housing.
The solution, IMHO, building more, could be theoretically be championed by the State, but with ever-increasing construction costs, regulation, taxes on everything, scarcity of land in big cities, and pensions entitlements, where will the money come from? It's not cheap to build with the quality standards that we all desire everyone to have.
Building co-ops like those that exist in Vienna do exist in Spain, but they are not a panacea, the same problems that a State-run initiative has will apply.
> Right now, the system excludes those who cannot afford the ever-increasing rents
It also creates a system where the only new buildings are luxury condos because on paper it’s usually the only thing that would turn a profit after investing a decade of hoop jumping and political wrangling. No affordable development would ever pass that sort of system.
So the gov is tasked with building affordable housing. Creating a bad situation themselves, pointing the finger at developers and only offering very expensive bandaids as the solution that happens to give them more power, money, and control over the city.
Kingmakers in an high end market while feigning solutions for the low end, and pushing the middle to the suburbs and small towns.
> Rent control, although well-intentioned and a very popular policy, has numerous negative effects supported by a variety of studies both in Spain and abroad.
No, it doesn't. Everywhere in Spain it works well. It was always there. Those 'studies' come out of mainly the bloated neoliberal Anglloamerican investment circles like the Brookings institute - which was cited just in this discussion.
> The solution, IMHO, building more, could be theoretically be championed by the State, but with ever-increasing construction costs, regulation, taxes on everything, scarcity of land in big cities, and pensions entitlements, where will the money come from?
China is able to build housing like that for ~1.5 billion people and they don't run out of money. Maybe the problem is the bloated, destructive real estate investment sector in the West?
Net, yes. But inside that Lottery - ticket sales are income, and collected winnings are expenses. And I'd bet that unclaimed winnings end back up in the government's coffers - therefor, you claiming your winnings means that you benefit at taxpayer expense.
Housing and rent are already heavily regulated in Spain. Some regulations and side effects of those regulations: