The free market means that renters looking for a place to live have to compete with vacationers and business travelers willing to pay hotel nightly prices.
One thing I found fascinating about traveling in Japan is the opposite effect: even in a world-class city like Tokyo, nightly rates on all but top hotels were incredibly cheap: decent hotels I could get $50-80 a night, airbnbs I could find around $20-30 a night. (I imagine it's much higher in peak tourist season, but I was visiting in February). The ample housing supply lead to a glut of stays which made it really cheap as a visitor. It's really a case study for free market housing done right, in my opinion.
The issue here is that we've enacted heavy government action (generally at the state/local level) to regulate development/redevelopment of housing and subdivision of lots, but we haven't had corresponding heavy government action to maintain an ample supply of housing. We can't have it both ways.
One solution to the housing crisis is to have government build hundreds of thousands of units of housing, flood the market with cheap housing units, and drive housing costs down (and ideally also provide for the poor at the same time).
Another is to systematically remove barriers to subdivision and development and let the free market go wild.
Finally, we can do nothing except blame companies like Airbnb and hopefully by banning those short term rentals we can keep our rent price increases to 10% this year instead of 20%.
Government construction of lots of housing was tried in the 60s and late 50s, with numerous public housing projects. It's generally considered a failure, because once the units were constructed the government had little incentive to maintain them. It was also a key pillar in enforcing de facto racial/class segregation.
Removing barriers to subdivision and construction can work though. That's the approach that Houston takes, and it succeeds at keeping home prices low, even if you do get occasional negative consequences like homes built inside a flood reservoir.
> Government construction of lots of housing was tried in the 60s and late 50s, with numerous public housing projects. It's generally considered a failure, because once the units were constructed the government had little incentive to maintain them. It was also a key pillar in enforcing de facto racial/class segregation.
Sure, but evidence of incompetently developed infrastructure doesn't mean it's impossible to develop infrastructure competently (although we americans do tend to assume our government will build infrastructure with maximal incompetence, and our government in turn often does). Anyways, it is an option even if it's not the best one.
> Removing barriers to subdivision and construction can work though. That's the approach that Houston takes, and it succeeds at keeping home prices low, even if you do get occasional negative consequences like homes built inside a flood reservoir.
yep. I don't like the car-centric development style that Houston is built as, but you can't argue with results (meaning, affordability).
I don't see how your assertion contradicts OP's. A regulation barring more dense developments solves the defection problem that a pact between property owners in a free market would have.
As long as the free market persists, then even if all property owners would benefit from fewer new developments, they have no practical way to enforce a pact to not build new developments, so their situation is a prisoner's dilemna where the best option is to build.
The same principle applies to price cutting. If all companies could enforce a pact to not cut prices, then they could extract economic rent via above-market prices and inflated profit margins, but absent government enforced price floors, the best strategy for any given company is to reduce prices to gain market share, to the extent that their production costs allow.
People living in major in-demand cities that provide higher average income and life expectancy than the rest of the country SHOULD have to compete with vacationers and business travelers. Long-term residents of such cities are geographically privileged, and Airbnb is a way to share that privilege with less geographically privileged people whose long-term residence is in cities that people don't visit for vacation/business.
You should also know that the "Airbnb harms rental affordability" narrative is one that was deliberately spread by the Hotel lobby via its astoturfing campaign:
