Fuck yes, give me more price discovery absent speculation
this post was submitted on 31 Jan 2024
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I still think that instead of banning perfectly valid use cases of housing to lower prices (forcefully decreasing demand), we should focus more on just building more stock to satisfy all needs?
And before someone says "we can do both!" we aren't. The majority of attention is going to things like this, and corporate investment (which is valid, tbh).
If you build more houses, what is to stop someone with capital using them to airbnb? Unless you are going to flood the market with SO many houses that airbnbs become too competitive to be profitable we end up in the same scenario. And that level of building seems kind of ridiculous.
SO many houses that airbnbs become too competitive to be profitable we end up in the same scenario. And that level of building seems kind of ridiculous.
Why is that? It's simple market dynamics. Supply goes up to meet demand until they hit equilibrium. Works for almost everything else, why not houses? I think it would happen faster than you think, as prices go down and your airbnb is sitting empty for 3/4 of the year, suddenly it stops being such a good investment. Houses are only a good investment because we artificially made them into that.
Think through the market logic.
If I have capital and can rent out the house for anything above the market price of the house, I'll do so.
As more of us do so, sure, airbnb prices might go down, but so will property values as they are now tied to airbnb rentals. (And, as airbnb prices go down, demand will increase.)
For the market to work you'd have to somehow get a situation in which tourists are not willing to pay marginally more than it would cost to own the property for that length of time.
(Or you're counting on tourism drying up which seems like a fanciful dream.)
It's generally more profitable to own something and rent it to others than to sell at wholesale. As long as tourists are willing to pay more for short term than locals would over that period, it'll always be better to buy a property and rent it out. It's why investment properties exist.
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