Airbnb Drives Up Rent Costs In Manhattan and Brooklyn, Report Says (cnet.com) 188
According to a report from New York City's comptroller, Scott Stringer, Airbnb is causing rent prices to increase significantly in Manhattan and Brooklyn (Warning: source may be paywalled: alternative source), where the majority of the company's rentals are concentrated. The New York Times reports: In Manhattan's Hell's Kitchen and Chelsea neighborhoods and the Midtown Business District, which accounted for about 11 percent of all Airbnb listings in New York City in 2016, average monthly rents increased by $398 between 2009 and 2016, of which $86, or 21.6 percent, was a result of Airbnb's presence, the report said. In Greenpoint and Williamsburg in Brooklyn, the study said, rents went up 18.6 percent in those years because of Airbnb listings. Airbnb makes it easy to rent apartments to tourists, taking units off the market for full-time residents, the report said. The report said that Airbnb's influence cost New Yorkers $616 million in additional rent in 2016 as a result of price pressures.
...and? (Score:5, Insightful)
Every type of economic activity increases rents... like, all of them. New restaurants - increase rents. Jobs increase rents. So you flood an area with tourists and the rents go up? OK, in isolation that sounds bad - but what did all of that tourism money do to the local economy? If rents go up, doesn't that also encourage investment in the neighborhood? How can you just look at this one statistic in isolation? Cities were murdering each other to get the new Amazon headquarters... what would that do to rents?
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but.. But.... I want to complain about something and those big bad companies that make money are good targets!
How dare you tell me there is ANYTHING good about the thing I choose to complain about...
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NYC restricts the supply of housing by refusing to issue building permits, so prices are going up. The only solutions are rent control or usage restrictions.
Removing the restrictions on building, and allowing the supply to rise to meet demand is NOT a solution, because the NIMBY voters of NYC would never accept it. They don't want NYC to lose its "small town" neighborhood feeling - and, no, this is not a joke.
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"solutions" to what? rent going up? why is that a problem?
Because landlords are evil, and tenants are virtuous victims. Furthermore, victimhood is only available to current residents, not to people that want to live in NYC but can't because affordable housing is not available.
Stop rent control. Stop subsidizing rent. force the system to balance itself, instead.
Try running for NYC public office while saying that. Good luck.
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People who are already there get priority, because it's worse for them if they have to move. Might lose their job, kids have to change school etc.
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There's another way to look at this.
The hotel prices in Manhattan, just like the Bay Area, Seattle, downtown Chicago are berserk. AirBnB presence means I can spend about 1/3rd the amount of a hotel room, and spend the rest on needed things like food, transportation (expensive in all of these areas) and maybe have something leftover for a beer. Maybe.
Does that mean a NYer, San Franciscan, etc. has to pay more dough for their abode? I don't have to live there, thank heavens. This is not my problem. My problem
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Some areas do this-- require developers to do the upgrades necessary. Some just want more short-term tax base and look the other way.... leading to staggeringly rough strains on existing, decaying infrastructure.
There is little public policy guidance, and non-uniform implementations of it. The entire HOA debacle is a prime example of a good idea gone horribly bad. Many HOAs go bankrupt, leaving things like storm water management, sewage treatment and flow, and other basics hung on cities and counties to tak
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The problem is that individuals' wages don't increase because of rent increases. Most people can't go to their boss and say "hay, my landlord put the rent up, I need you to give me a raise to pay for it."
Instead they are forced out and replaced with workers who can demand higher wages due to skills/experience. And then they cycle repeats.
This is bad for everyone.
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Instead they are forced out and replaced with workers who can demand higher wages due to skills/experience. And then they cycle repeats.This is bad for everyone.
How is this bad for everyone? You seem to have described a self-repairing cycle that works quite well.
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The entire thing becomes a self regulating loop.
A very poorly tuned loop which is why you see big discrepancies between cost of living and average income across all industries between different cities. In a really big macro scale you are right of course, but the reality is that people will experience significant stress long before the balancing acts set in which has a very big impact on society.
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And in addition to this, people are not simply goods being rationally exchanged on an open market. They are often irrational, and most will fight change of any sort using any power they have available to them.
I'm a huge fan of free market capitalism. When you need a tool that will - on average - give you absolutely the most efficient market possible. It has allowed people to increase their standard of living to staggering levels.
With that said, sometimes pure efficiency and economic growth is not the end-al
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It is as self regulating as boom and bust. The problem with boom and bust is it is very unstable and due to extremes built into cyclic events, inevitably the bust is terminal decline and societal collapse. Waffling about the simplicity of allowing markets to self regulate ignores the reality of socio-political instability, riots and revolutions, all part of that cycle. So you do not allow self regulation because it must be regulated in order to force stability into a system that is inherently unstable. Alth
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I live in Vancouver, the second most unaffordable city in the world. Because the city is so unaffordable, the hospitals have shut down wards due to the inability to attract staff. The situation is far too complicated to resolve with "Let the market sort it out" because of the constraints and illiquid nature of the medical system.
Are these hospitals free to set their own prices? I suspect not. Healthcare in areas with expensive real estate should naturally cost more than healthcare elsewhere, due to the increased cost of space for the facilities and increased pay to providers (since they need to be able to live in the area).
In general, price caps create shortages, and this sounds like an example of that fact in operation.
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Enron was lobbying the State of California to do stupid things that would get Enron more money, and Enron was plenty dishonest on its own. The fiasco had a lot to do with Enron.
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Re:...and? (Score:5, Insightful)
There's no reason to think there are more tourists visiting NYC. Occupancy rates in hotels are down, year-over-year.
You are right that you have to look at mutliple factors, but you probably would want to compare rents, inflation and wages. After all, the important thing to the average renter is what percent of their money goes to rent.
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Occupancy rates in hotels are down, year-over-year.
I wonder if some kind of an alternative to a hotel became available in recent years. Like some kind of service that allows you to rent from a common homeowner.
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I wonder if this kind of app-based alternative locator could be applied to taxies to lower costs. Someone should look into this.
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So does that mean some hotels will close and be reconverted as apartments, driving rent down ? Sound like life and death of competing business models ...
No... (Score:2)
Nope. Regulatory issues aside (which wouldn't be a problem in NYC), the fact that AirBnBs are driving up rents means that the hotel rooms are still more profitable than rentals.
Re:...and? (Score:4, Interesting)
Yes. Hotels have daily housekeeping. No Airbnb place I have stayed at does. The market has spoken: Many people don't want to pay for that.
However, if Airbnb is popular because they don't pay a hotel tax, for example, then that is tax evasion, not free-market competition.
Why can't there be a middle-ground?
It's rather silly to expect homeowners to pay the tax rates of a multinational hotel chain to rent out their home or apartment for a couple of months while they go on a cruise or something, but there are legitimate concerns and problems that do in fact need to be addressed.
How about creating regulations such that in areas that have a population density higher than a set amount, property owners who wish to participate in AirBnB-style activities must be licensed. Make it cheap, like $25 or less for a year so that people will comply. Place restrictions on how many weeks/months out of a year the property may be rented out. If your property is not in a high population density area, then no restrictions or license necessary.
Strat
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How about creating regulations such that in areas that have a population density higher than a set amount, property owners who wish to participate in AirBnB-style activities must be licensed. Make it cheap, like $25 or less for a year so that people will comply. Place restrictions on how many weeks/months out of a year the property may be rented out. If your property is not in a high population density area, then no restrictions or license necessary.
As an additional thought, the number of properties that property owners applying for a license in high-population-density areas could register could be limited, and in super-high-population-density areas and certain locations such an apartment in a major metropolitan high-rise and/or a property located in a high-crime-rate area, could be required to show proof they carry an additional rider for damage & liability on their property insurance for a minimum amount based on average actuarial numbers to cov
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This is not the economic model being complained about. The problem in TFS is that people are turning apartments into full-time short-term rentals. We want to consider what will happen to your hypothetical homeowner, but he or she isn't the real problem.
The other thing is that AirBnB doesn't really oper
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It's rather silly to claim that's the primary use case for AirBnB as opposed to professional, permanent rentals. It's also silly to think that it's outrageous to expect the same tax rates of homeowners... taxes are on profit (income) or per room (occupancy.) The fact that they are rates fixes that.
There were regulations
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It's rather silly to expect homeowners to pay the tax rates of a multinational hotel chain to rent out their home or apartment for a couple of months while they go on a cruise or something
It's rather silly to claim that's the primary use case for AirBnB as opposed to professional, permanent rentals. It's also silly to think that it's outrageous to expect the same tax rates of homeowners... taxes are on profit (income) or per room (occupancy.) The fact that they are rates fixes that.
Did you even read both my entire posts? I addressed those concerns regarding using it as primary income rentals in a much more effective way than charging, as most of the larger cities do, ridiculous "occupancy rates" that typically per-unit far exceeds what hotels and motels are paying. Often these rates are copy-pasta straight from "industry" (read; the hotels/motels/etc) by the corrupt local politicians as simply a protection scheme for the hotels and more loot for politicians to waste or pocket.
There were regulations with licensed people only able to participate. Those are actual BnB rules. AirBnB,and their operators, just ignore them.
Because,
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It's rather silly to expect homeowners to pay the tax rates of a multinational hotel chain to rent out their home or apartment for a couple of months while they go on a cruise or something
Why is that silly? Platforms such as AirBnB would simply take the taxes out of the rental income and assist with the filings (if they don't want to lose their clients that is). Now you have hotels and AirBnB operating on a level playing field.
Here's a scary thought (Score:4, Interesting)
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There's no reason to think there are more tourists visiting NYC. Occupancy rates in hotels are down, year-over-year.
Clearly, tourists are choosing cheaper AirBnB stays over hotels. I can see two reasons that the AirBnBs are cheaper, one the hotels can do something about, one they cannot. The one they can do something about is the fact that AirBnB is cheaper in part because it doesn't provide all of the same amenities. When you stay at an AirBnB you do not get daily maid service, and in most cases you're expected to leave the place roughly as clean as you found it. In addition, you don't get room service, concierge servic
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Part of the regulation is for the benefit of residents, and removing it causes problems. Hotels have some degree of surveillance over guests, and can try to stop someone from, say, setting up a meth lab in a hotel room. A hotel can be held liable for excessive noise or other disturbances. Hotels are not normally in residential areas, so residents don't have the disadvantages that come with lots of short-term renters in their neighborhood.
To put this another way, AirBnB saves money by imposing costs on
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Cities were murdering each other to get the new Amazon headquarters... what would that do to rents?
Increases rent faster than wages resulting in an increased homeless population. Also Amazon is buying up the residential so they can bring people in and set them up with homes right away...
In short, Amazon is great for a city's economy, but it's awful for the people who are already living there.
And this is why we regulate hotels (Score:3)
And yes, this means we sometimes tell businesses to take a flying leap when their business is not conducive to the overall health and wellbeing of society. It's like the Olympics. No city in it's right mind would host it. Not all economic activity is 'good'.
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The Olympics is a competitive bid, and NYC bid on it in 2012.
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This is not "the economy" driving rent prices up or some other esoteric, abstract and complicated concept, it's simple basic supply and demand. If you don't put up your apartment for rent but instead decide to turn it into a one-bedroom hotel, you remove one apartment from the renting market, reducing supply of apartments with a steady or even increasing demand, thus driving the price up.
It doesn't get any simpler than that, I kinda doubt you don't know that...
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The entire point of my post was to dispute that narrative. A tourist staying in an apartment is not an economic drop-in replacement for a "normal" renter. They probably spend a lot more money on - if nothing else - food. Without understanding other ways in which AirBNB affects the local economy, this becomes a very shallow analysis that - as you point out - merely highlights a blindingly obvious relationship in supply and demand.
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This already assumes that this tourist only comes because there is an AirBnB available and would not have stayed in a hotel, which now is lacking that revenue. Revenue that is also far higher taxed (and not only because, let's face it, a lot of AirBnB income never makes it onto a tax sheet).
But that doesn't even affect rents. It's simply fewer supplied apartments for rent with a demand that remains the same. How AirBnB affects the local economy aside of apartment renting, if at all, doesn't even enter the e
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, if at all, doesn't even enter the equation.
Forgive me if I don't simply take your word for that. It's not that you don't seem like a reasonable guy - I'd just like to use data rather than theorizing. The $10/year increase in rents correlated to AirBNB in the study are not exactly breathtaking in any case. It would not surprise me if each apartment generated $120/year in additional recurring revenue to compensate. It also wouldn't surprise me if it actually resulted in less revenue. This isolated datapoint gives us very little to go on, and isn't a v
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Every type of economic activity increases rents... like, all of them.
Hazardous facility opening directly across the road. Garbage dump opening next door. New airport runway expansion directs all planes right over your house.
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Hazardous facility opening directly across the road.
You are playing a semantic game. It will still raise rents nearby as it creates new jobs. Yes, there will be both winners and losers - but in aggregate new economic activity will raise rents.
A better counter-example might be a giant robotic facility replacing a lower-volume manual facility, where the revenue might increase but total payroll goes down.
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No a hazardous waste facility opening in a residential area is going to push rents down. Nobody wants to live near it. If it hires more people, they'll be willing to commute farther rather than living next to the facility.
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Have you ever lived in NYC? Sure, across the street it will push rents down. A block away they won't even be aware of its existence.
Go out to the suburbs and as soon as you drive out of sight of it, the rents will all go up to accommodate the new workers.
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Every type of economic activity increases rents... like, all of them. New restaurants - increase rents. Jobs increase rents. So you flood an area with tourists and the rents go up? OK, in isolation that sounds bad - but what did all of that tourism money do to the local economy? If rents go up, doesn't that also encourage investment in the neighborhood? How can you just look at this one statistic in isolation? Cities were murdering each other to get the new Amazon headquarters... what would that do to rents?
Look at Vancouver, BC and I believe Toronto as well. Chinese millionaires looking to diversify their holdings and move money beyond Chinese government reach are snatching up units left and right and just rent them out as AirBnB properties. Of course that is going to drive up rent. Does it encourage more people to go to these cities? Probably not since most people have to pay the expense of flying, eating out, etc while they are on a trip. So they end up spending $200 for a weekend at an AirBnB instead o
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So maybe all of that is happening, but the point of my post is that we wouldn't know from this extremely limited analysis. All we know is that AirBNB increased rents in NYC by $86 over 7 years, or roughly $10/year. And that analysis is flawed because they make no distinction between part-time and full-time listings so they likely overstate the effect.
So I'm not making any judgements as to whether allowing AirBNB to operate is reasonable or not - simply pointing out that this study does not get us very far i
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So maybe all of that is happening, but the point of my post is that we wouldn't know from this extremely limited analysis. All we know is that AirBNB increased rents in NYC by $86 over 7 years, or roughly $10/year. And that analysis is flawed because they make no distinction between part-time and full-time listings so they likely overstate the effect.
So I'm not making any judgements as to whether allowing AirBNB to operate is reasonable or not - simply pointing out that this study does not get us very far in that debate.
Well I agree that the study is flawed. We don’t know exactly what AirBnB does to the economy of an area, but I think it should be readily apparent that it does affect rent when the units are being used as 24/7 AirBnB rentals as opposed to rental properties. They didn’t need to do a study for such a limited report. And there are probably areas where it actually benefits the economy, too. There are scenic areas where people own cabins that they personally probably only use a couple of months o
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But we have zoning laws that regulate the use of land. We don't let people build hotels or conduct business activities in residential neighborhoods, for instance. AirBnB is essentially allowing residential neighborhoods to be used as commercial enterprises, and that's pushing up the rents "unfairly" to the extent that it's against the zoning laws.
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I'd still consider renting to be commercial activity, even if it is allowed by zoning. I don't have a huge beef with zoning in general, but let's not pretend it is inherently fair in some way - it's basically NIMBY encoded into law... a way for people to protect their real estate investments. The only thing that makes it tolerable is that it grew out of a nominally democratic process.
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There's good reason for people to want to protect their real estate investments. Once you own a house, moving is very expensive. (A couple of friends of mine had a financial problem and looked into moving to a smaller home. Turned out that, when they went through the details, they wouldn't save any money for the time they were concerned about.) Anything that lowers the value of living in the neighborhood either has to be endured or the homeowners have to spend a lot of money.
As a society, it seems we
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Apart from building more accommodation. And improving transport links.
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So, I'm sorry for your personal situation. With that said, when you moved in you also drove the rents up. It's not like high rent is a new thing in desirable parts of NYC. Anyway, I'd need to know whether your situation is typical or not before declaring it a widespread "problem". It's possible that the increased economic activity of the entire neighborhood offsets the higher expenses that you personally incur.
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Supply didn't go down - warm bodies still inhabit the units. They are willing to pay more than the previous warm bodies - demand increased. Rent goes up.
It's a semantic game - both of us apparently agree that we are still on the supply/demand curve and it is behaving as expected. And that's my issue with this "report" - it restates a basic truth and does not make any attempt to bring us more data that would enable us to decide if this is a "good" rent increase or a "bad" rent increase. While there are alway
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If you want to really turn this into a semantic argument, I'm not interested in participating. We both agree that we are on the supply/demand curve, so whether demand went up or supply went down is not important. Let's move on.
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Have a nice day!
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I'm violating all my Slashdot sanity rules, but why not - it's lunch.
Semantic argument - go!
The supply/demand curve can be approximated as linear in the tiny little range we are discussing. This is because the average rent in Manhattan/Brooklyn is in the $2000 - $3000 range and according to the study we're talking about a $10 delta from that each year.... so our Y axis is moving in the 0.3 - 0.5% range due to AirBNB. Our X axis is dealing with a delta of around 10,000 units out of more than a million betwee
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Well, I'm a registered Democrat, but whether you "believe" in supply and demand or not - it happens. This overly-simplistic report, in fact, does nothing except demonstrate supply and demand. NYC has a perpetual shortage of housing in desirable areas, but it also has perpetual construction. I don't know anything about Seattle - and if this report were written about Seattle it wouldn't help my ignorance because the report is ridiculously shallow. I'd be floored if AirBNB didn't increase rents where it operat
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Well, except on the Barbary Coast and the Caribbean.
I got mine (Score:5, Insightful)
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True. We call that property rights. What you want is "I'm gonna take yours, by force if necessary".
FTFY
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You still didn't get the difference between equal opportunity and equal outcome, did you?
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I'm glad you finally acknowledge that there is a difference; took you long enough.
However, I'm not in favor of "equal opportunity" (which is, in fact, a government policy intended to produce equal outcomes). Nor do I generically endorse "equality of opportunity" (which progressives often use as a synonym for "equal opportunity").
I specifically only consider strict equality under the law, private property rights, and fre
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It shouldn't be called the gig economy, it should be called the "I got mine" economy. I'm also partial to the "screw you" economy.
I don't think it's a "gig economy" thing. The "Me Generation" has been around for decades.
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No, this is about a company making a market more efficient, by bringing together buyers and sellers.
No, you could not. Capitalism means free markets, and outlawing AirBnB is incompatible with free markets.
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No, you could not. Capitalism means free markets, and outlawing AirBnB is incompatible with free markets.
Even if one holds the opinion that not all markets should be free, can anyone give a reasonable answer as to why this market shouldn't be?
Just from a property rights perspective, its hard to argue that the owner of a property shouldn't be allowed to come to a mutual agreement with any willing party about who may sleep in a particular room tonight.
If anything, Hotels have a right to argue that they are over-regulated, while the argument that all their market pressures should be met with ridiculous regul
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Why are you asking me? I believe AirBnB should be able to operate freely.
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I bet you'd find it much easier to argue if the property in question was near you and they turned it into a meth lab, knocking shop, or a frat house.
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And ignoring regulations that make it better for the rest of us.
Capitalism doesn't mean everything is a free market. We've outlawed slave markets, for example, and historical records don't show a complete failure of capitalism. There's lots of things whose markets are restricted in the US, including
What about other zoning laws? (Score:2)
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What drives up prices... (Score:2)
... are people who are both able and willing to pay excessive prices. Those prices wouldn't exist if the sellers didn't already know they'll have buyers. Then for the next guy the price goes up a little again if the economy is doing well-slash-the Dow Jones is up-slash-insert bogus economic trend indicator here. The sellers are almost certainly greedy and nothing but self-interested, but collectively saying NO to greed is the only way to end it. Recessions are in fact the beginnings of a greed rollback,
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Of course people that are wealthy can tolerate recessions better than those that don't have any savings. I don't like very many expensive things, so I live under my means. The main thing that money buys me is peace of mind.
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What allowed you to have that successful career?
Short term rental should have restrictions (Score:5, Insightful)
Rental periods of less than a single calendar month in length should force the entire building to be qualified as a hotel, and require that there be no long term rental or ownership of any units anywhere within the entire building, beyond at most what is necessary for any dedicated management and/or maintenance staff.
Just IMNSHO....
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A better solution, and one that gets right to the heart of the market distortion that makes AirBnB rentals more economical than hotels is to permanently remove rent controls from any apartment that is used for short-term rentals. Landlords will be incented to turn in anyone using their rent-controlled apartment for AirBnB.
An even better solution is to abandon rent controls entirely, but that's politically infeasible.
Rent drives up housing (Score:3)
Just like AirBnB drives up the cost of longer-term rentals, the existence of rent in the first place drives up the cost of homeownership.
Rent (including interest, which is just rent on money) is the core mechanism that perpetuates and amplifies the divide between rich and poor, turning what would otherwise be a truly free market into exploitative capitalism.
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And in outlying areas, home building drives up the price of farmland.
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And in outlying areas, home building drives up the price of farmland.
And the shortage of farmland drives up the price of off planet O'Neill Cylinders [wikipedia.org].
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That is not always the case.
In my area, it is much easier for a poorer person to get admitted to rent a home than to be approved a loan to buy a house or condominium.
After that, the monthly cost (rent or mortgage payments + payment to the coop) is roughly the same although it varies by neighbourhood.
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That is not a truly free market because the important freedom in a free market is a “freedom from”, not a “freedom to”. My complaint is that what we have is too much like that, not too little.
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To elaborate on the post I made a minute ago:
The important rights in a free market are the claim rights that limit others' liberty to act upon ourselves and our property, and the immunity rights that limit others' power to change who has what rights and liberties. My complaint is specifically that we are not adequately immune from certain powers of contract that enable the creation of new claims obliging the payment of rents (including interest), without which what are currently rendered as such rental cont
A crock of !@#$ (Score:2)
>> average monthly rents increased by $398 between 2009 and 2016, of which $86, or 21.6 percent, was a result of Airbnb's presence
$400 / month over 6-7 years in NYC isn't that shocking (it wouldn't be in Seattle, $100 / year for apartments that only millionaires could afford in NYC is common in quick-growing areas.)
How do they attribute 21.6% of that to Airbnb again? TFA tried to make it sound all scientific, but really, guys? We need a doctor with a flashlight to explain it better.
It has nothing to do wtih too many people? (Score:2)
Landlords and the City Cause Increased Rents (Score:2)
Do you want to know what really causes rising rents?
Landlords. These leeches serve no purpose but to suck off the productive value from the real working class. Next, they remove available housing stock and drive up property costs forcing the working class people to either rent or leave town if they want to own.
You'll always hear this whiny reply (most likely from landlords) that they help gentrify neighborhoods and make housing affordable. Really? Have you ever seen a landlord do more than the bare minimu
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I wish I could upmod you but I've already posted upthread. It's heartening to finally see someone else who gets it.
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If you think that buying is cheaper than renting, why aren't you buying?
Of course, the median condo price in Manhattan is about $2 million. That costs you about $3000 in property taxes and $7000 in mortgage payments per month. Median rent for Manhattan is somewhere around $4500.
What the city does is determin
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CAGR (Score:2)
3% CAGR exceeds inflation, but not by that much.
I don't understand (Score:2)
How does an increase in the number of units on the market drive the price UP ? It would seem to me that greater available number of units would force the prices down. I am obviously missing something here...
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AirBnB customers compete with renters. And they compete rather well because between rent control and renter protection laws, AirBnB customers likely pay more and are less hassle.
Foreign Buyers (Score:2)
yeah, but... (Score:2)
Three questions:
1. How much did New Yorkers earn from renting their property through AirBnB?
2. How much did tourists to New York save from not having to pay exorbitant hotel prices?
3. How many more tourists came to New York (and spent their money at shops, etc.) because it was possible to rent a place (for less money) through AirBnB?
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On my last family vacation to N
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If your neighborhood has lawns, it's probably being subsidized by those without lawns [strongtowns.org]. Beggers can't be choosers!
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Not sure what he looked at, but the average rent in SoHo is about $5000 and in Chelsea about $4200. So AirBnB rental rates are comparable to market rates for long term rentals.
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Why does the NYT hate capitalism?
(1) Free markets and competition are killing newspapers and journalists are scared shitless.
(2) A crony capitalist (Carlos Slim) owns a significant stake in it, and he certainly hates free markets.