Let me give a concrete example. Bed Stuy is a neighborhood in New York City. It is currently facing gentrification, where long term residents (like local shop owners and families) are competing with short term residents (young professionals and tourists). These two forces already competed for rentals, the long term residents controlled the properties.
The short term residents are willing to pay a premium in the form of AirBNB to remain in the neighborhood.[a] This can take the form of a young professional staying in an AirBNB for a month while looking for a rental, or a tourist staying in the neighborhood for a few weeks. This has 3 important effects: 1) AirBNB makes money, 2) an apartment that could have been a rental becomes unavailable to long term residents, and 3) the lister of the AirBNB, who is typically a wealthy long term resident of Bed Stuy, makes a profit.
The result of these 3 factors is a continuous squeeze on poor, long term residents of Bed Stuy. It comes in the form of an increase in price on their most demanding economic cost: housing. (1) and (3) incentive the continuation of this process. (2) contributes to the downfall of the neighborhood in the form of housing instability.
For those who doubt that housing instability contributes to violence, look at the most unstable housing in New York City: the public housing. The wait lists are years long, the applicants are supremely vetted, and felons are generally not allowed. Any yet crime proliferates around the public housing in New York, including in Bed Stuy.
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[a] The flip side of this AirBNB housing premium is experienced by poor, long term residents in the form of rent increases.
Grouping young professionals and tourists together under short term residents is a little bit ridiculous. This type of thinking seems to dominate housing discussions, that young people (or any incoming immigrants to a city/neighborhood) are a nuisance that must be put up with, and the good, ideal state of the neighborhood would be for nothing to ever change and everyone to stay where they are.
You need more housing supply in Bed Stuy with or without Airbnb. It's reasonable to try to limit Airbnb so it doesn't get too out of hand, but it's definitely not the major driver of demand today. And you won't avoid gentrification by pretending that the demand is somehow not legitimate and can be easily controlled so that you never need to build anything new.
Honest question. What would a well-meaning, well-informed anti-gentrification activist find here to argue with?
I assume these people exist. And anecdotally, I'm 100% sure that the anti-gentrification protesters in my neighborhood include a lot of the young people you posit are the target of the anti-gentrification protests.
So, honestly asking:
- are we all just disagreeing on the basic economics that supply drives down prices at the neighborhood level?
- are young professional people in older rental apartments arguing that gentrification is _caused_ by the building of "high-end" units, which in turn price even _them_ out?
- something else entirely?
What would an intellectually honest, no-skin-in-the-game argument be?
Best I can tell, the best good-faith summary of the progressive stance on housing/gentrification would be that we can't afford to wait until supply & demand sorts this out. If most people can afford up to $1500 rent, but the cost of the median unit has gone up to $4000, realistically in the very best case scenario it might take 10-15 years until supply increases lower the median price to that level. And there are people hurting right now so we can't afford to wait that long.
Granted, I've never actually heard anybody say that, but that's an intellectually honest claim that seems in line with their views and that I think that is reasonably true. If they would say that, and they would commit to increasing supply in the long term in addition to proposing short term relief measures, I think we could have a much more productive debate.
The frustrating part is that what the vast majority of these people actually say, is that supply & demand have zero bearing on housing. And they've been saying this for decades. Failed progressive policies are a big part of why we have a housing shortage.
It's like if there was a small spark of a wildfire, and I were to claim that water won't work, we better just wait and see what happens. So we wait and let the fire keep getting bigger, and keep saying water won't work. At some point it actually becomes true that water alone won't work, once it is so far out of hand that there's possible way to deploy enough water to bring it under control. But the takeaway for the next time there are new sparks somewhere else should not be that water doesn't work!
I think they specifically meant young professionals renting for a single month, then moving on to other more permanent housing, and being replaced by another young professional doing the same thing.
I think one problem at least is that if an area gets filled with young professionals with cash to burn, the businesses in the area either start realising they can start charging premium rates for things or they get bought by people who do. In addition to this, as the area becomes more desirable and affluent, landlords realise that they can increase the rents. This means that over time, the area becomes unaffordable for those who have lived there for decades, unless there's something like rent control introduced.
> unless there's something like rent control introduced.
s/rent control/more housing/ and then yes.
Or perhaps do both, even better use housing vouchers instead. But you'll never rent control your way to a functional, affordable city. It can be a better bandaid than doing nothing at all but it's too untargeted and has too many downsides. And it very much falls into that same trap of thinking that young people aren't real residents who also need housing.
More housing seems to be very difficult though - developers are much more interested in building luxury flats that they can sell to people who aren't even going to live there, because that is a better return on their investment. Local councils are struggling horribly to build because land is so expensive.
Local council budgets are strangled enough as it is, and social housing is quite costly.
This sort of scale has to be driven at government level and the tories have a vested interest in keeping house prices as high as possible so that their voter base sees a return on their investment.
This is complete nonsense in so many ways. Multi-unit housing is mostly illegal to build, and even projects that do meet zoning requirements can get blocked by endless red tape. Fix that and housing becomes cheaper to build and it won’t all be “luxury”.
Also, “luxury” is just a nimby boogeyman and doesn’t mean anything. Older housing is still very expensive, because there is simply not enough housing. Even if new housing does come with a small premium over older, people move out of older housing into the newer housing freeing up space in the slightly less expensive older units for lower income residents, and the market as a whole gets less expensive as you build enough housing to meet demand.
Young people ARE a nuisance that must be put up with when en masse. I live in an area that went through the full extent of gentrification, from being colloquially referred to as a "slum" to being a place where single-family homes go for $1M+.
The first wave of gentrification were college students because they are the group that would pay $1,000/mo per bedroom in a 4-bedroom house (which is a common way for developers to flip a property into a rental). They did not give two shits about the neighborhood, and would constantly litter, trespass, and be noisy at all hours of the night... and as the density of students living in the area increased, it got worse (careless landlords renting to them is also part of the problem). Apartments change hands every year, so you're not even consistently dealing with the same nuisance neighbors.
I agree that neighborhoods need to change, but they need to change in a way that isn't unbridled gentrification. We need diverse multi-generational communities of families, young people, and old people because we keep each other in check (same goes for race and class). In my experience gentrification creates waves of homogenization.
> Bed Stuy is a neighborhood in New York City. It is currently facing gentrification, where long term residents (like local shop owners and families) are competing with short term residents (young professionals and tourists).
My friends just bought in Bed Stuy. If one of them hadn't worked for the city's planning department for a few years, there is zero way they would have gotten their paperwork approved in the timeline and cost envelope they needed. They would love to add a story to the building and rent it out, but that's impossible under their community board.
One of the most insidious unions in recent history is large landlords and anti-gentrification activists. Activists increase regulations and the cost of building and new entry. Landlords get asset appreciation while paying for "affordable housing. The latter creates multi-generational, heritable voting bloc to keep the whole mechanism in motion.
This analysis glosses over the underlying problem that drives the dynamic: the existence of NIMBY regulation and restrictions that artificially constricts the supply of housing.
Without supply constraints, the existence of wealthy high-end housing demand subsidizes not competes with working class demand. That’s because the primary characteristic of high-end housing is newness. Today’s luxury housing becomes tomorrow’s middle class housing.
This isn’t just theoretical speculation. We know this is exactly how markets without supply constraints work because of the used car market. Rich car drivers who insist on new, luxury vehicles dramatically lower the cost of car ownership for everyone else by creating a robust used car market. There’s no such thing as “auto gentrification” because carmakers can simply create new and better supply to satisfy high-end demand.
Product quality improves continuously and the poor have access to 10 year old cars that are virtually identical to new luxury cars at a small fraction of the price. The used car market is arguably the greatest source of tangible wealth redistribution in the American economy.
New housing developments almost always will raze a decades old building with 3 or 4 apartments per floor for a shiny new building with 1 or 2 "luxury" apartments per floor. This is partly due to zoning (affordable housing is effectively illegal at a municipal level) and partly due to the housing market (the working class cannot afford to purchase new housing, they must rent the old).
Love the upside though, I've been traveling during covid and staying one month here and there, and this wouldn't have been possible without AirBnB. I've also used AirBnB to stay for a month in SF while I was looking for apartment in the same neighborhood (not my first time doing this). I can't remember the last time I booked a hotel honestly, unless I was forced by work it must have been a decade.
It's a great upside for you. It's a huge downside for the people who actually need to live and work in an area. AirBnB is one of the worst things to have happened in some cities (I know Barcelona has reacted quite negatively to it). In Dublin, for instance, the pandemic literally doubled the long-term rental supply as houses/apartments flooded off AirBnB.
And that's exactly why it's a problem. So many people are traveling, and so many are taking houses that could go to residences of the area.
Also, I don't like that generalization. I stay at hotels when I travel, and actually so do most of the people I know who travel regularly. They prefer what they get with a hotel over AirBnB. So it's not quite as widespread as that, though I do agree, and will counter that that only exacerbates the problem. It's the entitlement of tourists to feel like they should live like the locals when they're not.
If one party is willing to pay higher prices, isn't it basic Free Market Economics to say that it's good that the housing supply is now going to the people who value it higher?
You keep talking about how this is bad for some people, but that just means a tradeoff is being made, and you're not making any argument that it's a bad tradeoff. Why are the tourists "entitled" but the locals somehow aren't?
(Honestly curious here - real estate economics seem to run by different rules and I've never understood why this is so bad)
> isn't it basic Free Market Economics to say that it's good that the housing supply is now going to the people who value it higher?
This assumes basic free market economics is good in all cases, which is not something I agree with. Especially with something this is an essential need (living residences) and in a finite supply.
> Why are the tourists "entitled" but the locals somehow aren't?
I mean, the locals actually live and work there. The tourists don't. They come in, do what they want and leave. They want to live like a local while they're there, though, even though they're not locals. And them living like a local actually harms the real locals. It's the entitlement that they feel that they should live as if they're members of the community when they're not, and that it happens at the expense of the residents of the town.
I find it hard to believe someone is "entitled" to be able to live like a local in their own town.
> (Honestly curious here - real estate economics seem to run by different rules and I've never understood why this is so bad)
Because it destroys the housing market for the residents of the town/city. Driving up prices for them, and driving them further out of the city, etc. Lots of negative externalities come from it for the people who actually need to live and work there.
Doesn't living like a local mean using local services, spending money in local shops, attending festivals and adding to the culture?
A beach town makes most of their money in the summer and it pays for services year round residents enjoy.
These places are better off for the tourism. Many people can continue to work locally because of tourist because locals are buying off the internet.
More and more people are coming to the US. Hanging a newcomers are not welcome here sign ignores that areas of New York start off as one group and constantly change as new waves of people come to the city. The city keeps getting more expensive.
> Doesn't living like a local mean using local services, spending money in local shops, attending festivals and adding to the culture?
The thing is, a lot of these are leaving. As the full-time residents move out of the city, the businesses that cater to them do too, and what's left is touristy things, making it harder for the few residents who do still live in an area overrun by short term rentals.
I'd also argue that visitors who only stay for a week or a month do not add to the culture of a town. They're there to take advantage of it without adding anything, and it ends up destroying it as all those who actually do create the culture get pushed out.
> Hanging a newcomers are not welcome here sign ignores that areas of New York start off as one group and constantly change as new waves of people come to the city.
That's not what I'm arguing. I'm not arguing that newcomers aren't welcome. I'm arguing that tourists who want to live as locals harm the area by forcing prices up for the residents of the town and forcing them outwards, as well as myriad other issues (e.g. coming home at all hours of the night loudly drunk while people are trying to sleep because they have to go to work tomorrow)
The people working at those tourist shops live locally and the tax money gets put into local schools. The profit back into the community.
Tourist do add a lot of culture. They are happy to be there and they add people on the street. They make socializing in local bars / restaurants more exciting.
I honestly can't see a negative.
Your prices are going up because it's New York. New York doesn't sleep but it's not the tourists. Buffalo is a great town. At night the downtown is empty at night. The drunk homeless are usually local.
It's not just New York. It's not just the big cities. And it's not just prices going up. I'm not anti-tourist. I'm anti-tourist thinking they deserve to live like the locals when they're not. Tourists can stay in hotels and still go out to the bars and help bring money to the city. What they shouldn't do is feel entitled to live in a house. In fact every house they live in is one less for the locals to actually live in. That's the issue. It drains supply, which does cause prices to rise exactly for those who can't afford it (who's the ones most likely going to be working in these tourist shops? Not those who can afford $1000+ rent that's for sure).
And the thing is those local bars/restaurants often move out once there's no longer locals around. Tourist bars and restaurants move in, as is seen in several neighborhoods in Barcelona. Tourists feeling like they have the right to live in houses that the locals need is the issue, not tourism itself (at least for this specific one).
I still disagree that tourists add much to culture. Culture of an area is more than just a transient thing caused by people being on the street. It's the festivals, customs, etc of the people of the place. Tourists don't contribute to this in my opinion (except, perhaps, in negative ways when they stumble back to their AirBnB in a residential neighborhood waking up all the people who live there and who have to go to work tomorrow and leaving the area trashed).
An area full of tourist shops is nothing that could be called "local". It's just the exactly identical t-shirt and trinket booths you will meet everywhere in the world, basically ruining the experience even for the tourists (at least for those who care).
It is unstable in that 1) it is a housing option of last resort and 2) no one wants to stay longer than they need to. It is not a place where people "put down their roots," partially by design, partially by circumstances.
I doubt length-of-stay is normally distributed. I would wager that the distribution is skewed heavily to the left. This would result in a that the median is much lower, with a mean that it is biased to the right due to a small number of unusually long leases.
tl;dr: the mean is almost certainly the wrong statistic.
Anecdotally, my closest acquaintance in NYC public housing lived there because she is disabled, unable to work, and has no one to take care of her due to age. She has lived in the same public apartment for decades because she is dependent on the state. Her son fled the apartment after living there his whole life, because he cooperated with NYPD on a murder investigation and was threatened by the local criminal gang. Her only roommate now is her orphaned teenage grandson who is vulnerable to the gangs and has ambitions beyond his immediate circumstances.
I live in Minneapolis. The amount of high end condos and lofts going up around the city is staggering. Same thing in the outer ring suburbs. They're going up faster than they can fill them.
My buddy was a professional hockey player. He played most of his career in Europe and just recently moved back. Moved into a nice condo in the down town area. Four months after moving in, he's seeing ads for the many, many open condos in his building, which have been discounted some $20-$30K below what he paid.
We're now creating a deluge of high end housing that is now sitting empty and the owners/developers are having to compete side by side with each other for tenets now and its become completely cut throat. Add in businesses and people are fleeing the city and those owners are already starting to see the coming nightmare.
So yes, I agree we need to build more house, but FFS we need to build according to the needs of the community, not the developer who's in a "get rich" scheme to gentrify huge swaths of the city.
Pretty much nothing in your screed is factual. The Minneapolis "building boom" reflects the general trend in most of the nation: expansion of the housing stock since about 2005 has been negligible, much less than 1 per hundred residents per year. This is about half the rate of real expanding cities like Houston.
I don't know what better signal you expect than the fact that median sale price of homes in Minneapolis proper has gone up 45% in only 5 years and the time to sell is now 11 days instead of 21 days in 2016, according to Redfin.
I'm not sure I understand your complaint here - it sounds like developers built a bunch of supply, and prices responded by going down? Isn't that exactly what we want?
Crime doesn’t “proliferate” around housing projects in Bed Stuy, it exists just as it does everywhere. Bed Stuy and NYC as a whole rank as one of the safest cities, especially large cities.
Linking the housing projects to crime without rigorously accounting for all other factors is irresponsible. Perhaps housing projects are more heavily policed so more crime is recorded. What factors (ie poverty and low political capitol) led the housing project to be placed where it was.
Housing instability is a critical issue and increasing density and available housing stock is an urgent need.
This totally ignores the positive impact of making housing available to those willing to pay the most for it.
If a young professional is willing and able to pay $3,000 a month for a unit, and a poor long-term resident is only willing and able to pay $2,000, renting to the former will lead to the more productive party gaining access to the high productivity neighbourhood.
If there is a 20% productivity boost from living in the high productivity location, and the young professional generates $12,000 a month in value, while the poor long-term resident generates $5,000 a month, allowing the young professional to outbid the poor long-term resident will lead to a $1,400 boost in monthly productivity.
That productivity boost in turn leads to more jobs created for more poor people.
The effect of Airbnb on the price of housing is pretty small, maybe a few percentage increase.
Not saying that isn't worth doing something about but there it certainly wouldn't be at the top of my list. End onerous and restrictive zoning and increase housing supply should be the first move.
The article you cite is not supporting your view. In fact it lists many cases where Airbnb (or short term leases in general) have a significant effect on both sales and rental property supply and is pushing up prices as a result.
A few percentage increase in a city of 8 million results in thousands of uprooted lives at the margin. I used Bed Stuy as an example because it seems to me a marginalized community. It is surrounded by poorer and richer neighborhoods that do not have the same housing problem I have described. In some sense Bed Stuy is the "frontline" where the processes I describe converge.
Much like in war, the people on the "frontline" experience direct disturbance to their way of life, while those who live far away from the "frontline" have their lives go on as normal even if they are aware of the problems nearby.
The pandemic literally caused housing supply in Dublin Ireland to double due to people fleeing the short-term rental market when tourism dried up. We're talking from ~1600 listings to 3000+. Even if it doesn't affect cost, which is ludicrous given those numbers, it's certainly affecting the supply at a huge rate.
You're attributing the surge in rental supply in a major city during the pandemic entirely to Airbnb?
This is really lazy, unserious analysis.
Housing supply in cities across the entire western world shrank because people were working remotely and fleeing urban centers which were shut down and huge centers of spread.
The short term residents are willing to pay a premium in the form of AirBNB to remain in the neighborhood.[a] This can take the form of a young professional staying in an AirBNB for a month while looking for a rental, or a tourist staying in the neighborhood for a few weeks. This has 3 important effects: 1) AirBNB makes money, 2) an apartment that could have been a rental becomes unavailable to long term residents, and 3) the lister of the AirBNB, who is typically a wealthy long term resident of Bed Stuy, makes a profit.
The result of these 3 factors is a continuous squeeze on poor, long term residents of Bed Stuy. It comes in the form of an increase in price on their most demanding economic cost: housing. (1) and (3) incentive the continuation of this process. (2) contributes to the downfall of the neighborhood in the form of housing instability.
For those who doubt that housing instability contributes to violence, look at the most unstable housing in New York City: the public housing. The wait lists are years long, the applicants are supremely vetted, and felons are generally not allowed. Any yet crime proliferates around the public housing in New York, including in Bed Stuy.
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[a] The flip side of this AirBNB housing premium is experienced by poor, long term residents in the form of rent increases.