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.
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.
Once we get beyond a certain amount of airbnbs, your house is going to sit empty, a lot of the time. That’s lost money
Running an airbnb has expenses much beyond a regular rental, like fully cleaning the place, various bills etc.
Plus the cost is not directly proportional to airbnbs, as long as other things (actual people living there exist). Short term rentals are not a new thing. Airbnb just made them a bit easier and more popular. The only thing new is the housing crises
Once we get beyond a certain amount of airbnbs, your house is going to sit empty, a lot of the time.
Why wouldn’t the laws of supply and demand adjust the prices until I’m renting it out? I mean, heck, the minimum I can get for it is, by definition, the rental market (short OR long term.)
the cost is not directly proportional to airbnbs, as long as other things (actual people living there exist).
This is literally the entire problem with airbnbs!
As long as tourists are willing to pay slightly more than locals are to live somewhere (which is how we expect vacations to work, your rent is probably an amazing deal daily compared the airbnb equivalent!), that difference will always encourage speculators to use airbnb and extract that value from the housing market.
If you do rent it out, then that’s one less airbnb
You’re missing the point. That’s literally the lowest possible price you would ever get with an airbnb. As long as tourists are willing to oay slightly more than rent, it’ll be more profitable to not rent.
Supply and demand doesn’t magically change prices to keep it profitable for an infinite supply, it does by actually changing the supply.
You’re so close…
A) YES! There isn’t an infinite supply
This is part of what will keep airbnb prices above rent.
B) When the supply changes, prices adjust until demand meets supply. That’s the entire basis of a free market. So, as the airbnb supply expands, sure price might lower but as it does, demand rises. It’s very hard to envision a scenario wherein supply rises so much that all the tourists are taken care of at such low prices that local rents are competitive.
But you seem to be ignoring the fact that running an airbnb costs much more for the owner than renting. And that if demand is low, the house will sit empty most of the time, even if it makes more money/time when you do have an airbnb guest.
idk man, I do think we could get airbnbs cheap enough, but I don’t feel like continuing this conversation more.
But you seem to be ignoring the fact that running an airbnb costs much more for the owner than renting.
What are you basing this on? Airbnb charges cleaning fees. Any structural maintenance has to be paid for regardless of whether the home is a long or short term rental. And airbnb has insurance for serious damage.
If airbnb were much more expensive than long term rentals, it wouldn’t exist.
I’m pretty done too, you’re trying to claim airbnbs don’t do exactly what they do and that the answer is to somehow add more of them so that tourists pay about what locals pay, which is utter silliness.
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.
You’re ignoring a few things:
Plus the cost is not directly proportional to airbnbs, as long as other things (actual people living there exist). Short term rentals are not a new thing. Airbnb just made them a bit easier and more popular. The only thing new is the housing crises
Why wouldn’t the laws of supply and demand adjust the prices until I’m renting it out? I mean, heck, the minimum I can get for it is, by definition, the rental market (short OR long term.)
This is literally the entire problem with airbnbs!
As long as tourists are willing to pay slightly more than locals are to live somewhere (which is how we expect vacations to work, your rent is probably an amazing deal daily compared the airbnb equivalent!), that difference will always encourage speculators to use airbnb and extract that value from the housing market.
If you do rent it out, then that’s one less airbnb, and more competitive housing market. That’s literally what start started this debate.
Supply and demand doesn’t magically change prices to keep it profitable for an infinite supply, it does by actually changing the supply.
You’re missing the point. That’s literally the lowest possible price you would ever get with an airbnb. As long as tourists are willing to oay slightly more than rent, it’ll be more profitable to not rent.
You’re so close…
A) YES! There isn’t an infinite supply This is part of what will keep airbnb prices above rent.
B) When the supply changes, prices adjust until demand meets supply. That’s the entire basis of a free market. So, as the airbnb supply expands, sure price might lower but as it does, demand rises. It’s very hard to envision a scenario wherein supply rises so much that all the tourists are taken care of at such low prices that local rents are competitive.
But you seem to be ignoring the fact that running an airbnb costs much more for the owner than renting. And that if demand is low, the house will sit empty most of the time, even if it makes more money/time when you do have an airbnb guest.
idk man, I do think we could get airbnbs cheap enough, but I don’t feel like continuing this conversation more.
What are you basing this on? Airbnb charges cleaning fees. Any structural maintenance has to be paid for regardless of whether the home is a long or short term rental. And airbnb has insurance for serious damage.
If airbnb were much more expensive than long term rentals, it wouldn’t exist.
I’m pretty done too, you’re trying to claim airbnbs don’t do exactly what they do and that the answer is to somehow add more of them so that tourists pay about what locals pay, which is utter silliness.