**User Report**| | | |
:--|:--|:--|:--
**Total Submissions**|3|**First Seen In WSB**|1 year ago
**Total Comments**|47|**Previous Best DD**|
**Account Age**|7 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
There is also a huge problem with foreign buyers buying investment properties, money laundering through real estate, and investors bidding up the markets (iBuyers like Redfin and Zillow).
The whole system is a mess.
Not just "money laundering". A lot of basic "wealth parking" by Russians and Chinese in particular. When you don't trust where you are, buy US real estate to park your cash.
I believe trump passed some real estate development gift to his buddies & Jared in those areas if I recall. I don’t remember the details anymore but when I read it I knew it was billionaire handout bullshit
If i remember correctly they used 2000 census data to designate opportunity zones. One place where i live was designated that and legit it was bought up by a developer in 2010 and is now one of the most expensive places to live. It was meant to help struggling regions but the data they used was stale
This has been a huge issue for years.
NYTs had an article about this in.. 2014... maybe sooner.
Wealthy Chinese have been using the US housing market, especially on the west coast, to pay each other and park money out of reach of the Chinese government.
It got so bad in Vancouver that BC put something like a 10+% tax on foreign buyers.. or something like that.
It didn't stop anything, they just opened up Canadian and US based companies and continued to buy.
I don’t blame them actually. Normal human survival behavior. If you think your state is unstable and/or corrupt, you absolutely have to put some percentage of your assets out of reach, for your family if not for you. Just so happens U.S. real estate is cheap (relative to rest of world) and safe and even with the GFC, pretty damned stable.
Ah yeah, the alarmist stuff. Great thing about foreigners buying property, they can't take it with them if/when there is time of war. I worry more about IP (intellectual property) than farmland that can't be moved.
They can take the water and the crops grown with it.
https://www.motherjones.com/environment/2021/06/foreign-companies-export-virtual-water-american-drought-southwest/
https://apnews.com/article/water-foreign-farms-arizona-drought-saudi-arabia-2fe3ea1fad43b14ca118cf85196f3e9a
Honestly I don't know why this isn't a bigger deal. Only fringe politicians on the right are talking about this while the liberals are spinning it as racism. Nobody gives a fuck if someone from China or India or wherever is buying a vacation home in the US. But when half of California's apartments are being bought up by Chinese firms, I don't see how this isn't a bigger problem. We've got rent coming out of Americans pockets and going into the pockets of a foreign adversary.
The largest lobbying group is the National Association of Realtors, so that might have something to do with it. Also, local governments get more tax revenue as a result of the higher prices, so they aren't rushing to stop it either.
And the hedge funds, rich people gobbling up real estate to diversify. It happened a lot during Covid. Unfortunately it’s screwed everyone who didn’t buy early enough, or wasn’t at the proper place to do it, now they’re priced out. Crack down on the investment property, international money bullshit & rents come down. Employers stop bitching about their employees wanting a livable wage because they can’t afford rent, a problem that many had a hand in creating. The misconception is business owners who make money are smart, which is definitely not the case in my experience working in B to B for the last 25 yrs.
A house across the street from me was sold for almost 100% over the asking price and then listed it for rent immediately. About 6 months later, the house changed title ownership and the record showed that it "sold" for 10X the amount. It's got to be some kind of mortgage fraud or money laundering, but how can they do it when records are public? Which agency should I report it to, FBI? FTC?
Housing is extremely regulated. Don't throw this on the freemarket between.
Zoning
Strict building regulations and licensing
Localized price controls, and/or tax controls
Housing isn't being built fast enough in the high demand areas, mostly because of grinding regulation and zoning committees that makes everything take a good bit of time and effort.
You seem to know a lot about real estate market so maybe you can help me square this one since I don’t know much about the market. I heard that we can’t fully blame the government and regulations for the housing shortage in some areas because the residents vote on whether there can be new developments or not. A lot of times, the residents vote against new developments in order to maintain the property value of their homes. For example, i heard that this type of situations happen a lot in San Francisco/ Bay area. Would you say that is an accurate assessment or there is something more to it?
It's a good number of factors, and individually one by one they make a good bit of sense, it's when collected into a group that they cause their problems.
Also yeah a good bit of zoning decisions are very local government decisions, and if you live there you can actually have a good bit of influence on them. Compared to more state/national politics where it's very difficult for you personally to make an individual difference.
I personally they are thinking less about property value and more a giant increase in traffic or noise pollution, but it really depends on the person.
You are correct. In order to keep property value high, residents will band together and hire an attorney to file lawsuits against any development approved by the local planning commission. In wealthy areas they will go to any lengths to stop building near them. Recently a private school stood on its head to stop the construction of seniors community next to them (open land) to 'save their view'. There was a 500K settlement agreed to for 'future school needs' to get them to stop filing suits.
Yea nimbyism is a huge issue in a lot of markets. People with homes don’t want anyone else to have a home in their neighborhood for various reasons, some understandable, some just incredibly selfish.
when the nimby bought a house they bought that neighbourhood and its density. so any normal human being (has a right?) would not want that density increased and stuffed with bullshit new homes so a developer can make money.
they call it nimby but its just fucking common sense.
But the problem is that they bought there before me! And I want the same deal they got. HMPF!!!
That said, everybody needs to just stop throwing SF out as an example to debate policy around. Not that many places so high in demand (at the pace of most of 1999-2019, my god the pace of demand), naturally bounded, and characterized by quite the same unit density / tenant protections....
When they buy a fairly new house next to undeveloped land that is not deed-restricted, they know it's open to development. But they got theirs, screw anybody else. They don't want to pay for the land, but they don't want anyone else to have anything on it.
This is the correct answer the biggest problem is government restricting housing, driving up cost it's unbelievable all the fees and regulation hello people
Here in irvine, orange county CA, there are so many foreign buyers and investment banks. The buyers come here staying in airbnb and go home shopping.
Banks are flipping homes for 10~15% more in less than a week from closing and back in the market.
You hear so many incidents where you reserve airbnb single home or town home unit, you go there and turns out either someone else is living or occupying. Airbnb owner hires multiple agents ends up double booking or forgot to update the listing that it was sold.
So bad here… to the scary level that what if one day, they all pull back cause they can’t payback interest in their country and trigger sale rush.
Just like panic selling in stock.
Things are going to be bad…..
Only the locals who bought with 1% interest will be watching the crash eating popcorn.
Zillow and redfin are cartels. I cannot fathom how they are still in business and crowds with pitchforks and torches haven’t gathered outside their offices yet
So maybe I should have shared a little more info. I’m not going to name the country….
A certain foreign government recruits its citizens to go overseas and loads them up with capital. The goal is to land into the US and buy real assets. Homes, businesses, etc. foreign citizen shows up starts buying stuff. Ding ding ding invested enough to be granted a green card. This foreign citizen is in America at the leisure of their government. Whatever assets were purchased don’t really belong to the person but their government. They can enjoy these assets while they are here but at any moments notice they can be called back to their home country. If they choose not to go you can imagine what happens next.
The shitty part here is that there’s a lot of them coming and buying up a lot of stuff in the US. Effectively blackballing actual citizens from being able to buy homes at reasonable prices or even businesses. The same things happening in Canada. It’s kind of economic warfare if you think about it. The US is quietly being bought out by this foreign government
China.
India doesn't have such a system in place. I know as I am a born Indian Citizen, became a US Citizen through the Dual Citizenship program, and then became an Overseas Citizen of India when that program was dissolved. We don't need to buy homes in any country, we have better opportunities back home. Our govt back in India wants us to remain in the country to develop it further, rather than move elsewhere.
However, I can tell you that people from Pakistan and Bangladesh seem to have their hands on the idea of making as much money possible, with as little work done as humanly possible. Their societies require and promote the idea of multiplying wherever, whenever. Whether it be in wives, children, or houses. I know of 3 separate Bangladeshi families who have 3+ homes each, and 4+ children per legal wife. I also know of 2 Pakistani households whose head lives with 2-3 women, all of which, who he has children with, claims one is the legal wife, and the one or 2 other women are "cousins" or "extended family". They collect child support on all of them.
Edit: Didn't mean for this to be politically or religiously targeted. But that seems to be how the cookie crumbles. Not all people who are from those countries do that, just those special few.
nah.. its not a grand govt plan.. people who are making money there are parking their assets outside in case govt turns on them.. which they tend to do every now and then..
> Even at the furthest extremes of capitalism, no one benefits if your “customers” can’t even afford your “product”.
That's the thing though, they can. If no one was buying houses for 4x what they're really worth, they wouldn't be selling them for those prices. The problem is that there is a small number of people who are rich enough to afford them, but there's also a small number of livable homes actually available - so that market and those people are basically at parity. Everyone else below that Cool Kids Club is in a caste and living 5-people-to-a-mobile-home and struggling to survive who are forced to be eternally fighting in the pit in a never-ending Dangling Cash Suitcase ladder match.
True. I was using a bit of hyperbole just to simplify things. The housing market didn’t used to be like this though. Regulation can help fix what’s broken more than anything else
Regulation that absolutely includes making short term vacation housing illegal, like AirBnB. Which, sucks for AirBnB I guess, but they’re objectively profiting off of homeless people in the most direct sense possible. That, or taxing the hell out of those homes and putting it toward low cost housing for low income families. Simple, but the real estate, gas, entertainment, tourism and local state lobbies don’t want Washington DC to do that, so it probably won’t.
Florida freaks will in the same sentence talk about MUH HOMELESS IN PORTLAND!!!! and then go to Orlando and stay in a Chinese-shadow investor house that is unoccupied 75% of the month to visit Disneyworld and stuff their fat faces. This country blows, man.
Housing in the boom areas is correcting, right now, ever month. Housing prices are not stocks though, they take years to correct to fair pricing when there even is a correction.
I do agree though, that an entire generation of people have completely sold out another, younger entire generation of people.
That’s the rub, say you finally go to sell your home, a housing crisis is hot in the city you’ve lived in for 35 years and your house you paid 500k for is selling for 2mill, you going to walk away from that cash?
Also can’t forget the whole thing where illegal immigrants undermine centuries of wage and labor right progressions that Americans literally fought battles for
“But people don’t want to work those jobs anyway!!!!”
Well yeah. Americans don’t want to work those jobs because they’re way underpaid, and a very large reason why is because there are hundreds of thousands of newly found people willing to work for so cheap that it’s literally illegal to be paid that little. Go through the system properly and everyone wins, you get paid like the American you now are and everyone else doesn’t have decades of progression of their wage and labor ruined
Hispanic immigrants in LA pretty much completely displaced the historical black population out of all its neighborhoods and they took over a lot of work and businesses that blue collar black men used to do.
Yeah, and the only reason why the “capital owners” have the option in the first place is because of the constant influx of a large amount of illegal immigrants. If they didn’t they would have no choice but to cater to demands in which gives workers more power and rights.
I just think it’s so fucking wild how this country has a wage and working rights issue already, and instead of doing something about it let’s import thousands of people to treat even shittier because we can’t treat Americans that way. And y’all with this logic think you’re the moral ones lol
this is such a brain dead take since CAPITAL OWNERS lobbied congress to remove migrant workers protections for seasonal jobs, like the agriculture industry. in the past, migrant workers would come to places like CA, work a season, make good money, have worker protections, and then leave to their homes.
Now, our dogshit policies keep migrant workers IN. Suppressing wages and forcing a permanent underclass with no protections to retaliate against dog shit capital owners.
Let me guess, you want a big beautiful wall built as well?
That happened in the 1970s. I forgot who started it, but it was some military figure. You're correct though. They don't actually want to live here. But re-entry for seasonal work became so cumbersome it became easier for migrant workers to just stay here and send money back to their families in Latin America.
I have a super hard time getting mad at people who are fleeing violence, oppression, and otherwise shitty living conditions that our country directly or indirectly caused in their homelands, for the fact that they are being shamelessly and criminally exploited here.
Easier, in my opinion, to get mad at the business owners that profit by capturing extra value through illegally underpaying them. The people "importing" immigrants (which is who, exactly?) aren't the same as the assholes taking advantage of them. Honestly throw those dickbags in jail and donate their businesses to the immigrants, they're doing all the damned work anyway.
Just my opinion though bud, you do you.
The capital owners are forced to use cheap labor, or go out of business. Anyone not using cheap labor has to charge customers more to pay for the local labor. Customers then flock like psychopaths to the guy exploiting illegal workers as the cost to them is lower.
Hands up if anyone here is happy paying more because the labor is legal?
Capital owners couldn't possible take a reduction in pay. They must have generational wealth the likes of which the average person cannot comprehend or they'll literally starve.
I can’t tell who’s being ironic here but they do obviously utilize housing, although usually crammed in more to a house than typical Americans
Source : my extended family
WTF are you on about goofy? Who do you think is providing the cheap labor to build the actual homes needed to combat the housing shortage?
Lol I'm sure a lot of Guatemalan immigrants are swooping in to buy $600,000 houses with no line of credit and no traceable income source.
Go back to your Q'anon message boards and find a new outrage issue.
oh yes let's blame the illegals with their billions of dollars for buying up all the starter homes and renting them out
it's a never ending circus with you people. immigration is fuel for our economy, gets jobs done no American wants to do and helps keep our already aging top heavy society less imbalanced than Japan, Europe and China and many other developed societies getting crushed by the demographics of a retiree heavy society
illegal immigration occurs and occured under every president including Mr let's build a wall..
just get over it already
legal immigration that brings the best and brightest of the world can be a boom for the economy. illegal immigration that brings the poorest of the peasants who lack any high education is not a boom to the economy. In fact, it's a net negative as those same people, and their children will be trapped in generational poverty while being dependent on the government to meet their basic needs. Dont conflate the two.
It’s so easy to fix too and the system is already in place in several states. Raise real estate taxes and provide a generous homestead tax credit for your primary residence. Then property investors will help fund your local government services.
It will also make home prices more reasonable.
In LA it's build absolutely everywhere and then try and charge 80% higher than the older buildings while providing 60% of the square footage, and fewer amenities. But hey we've got a dog walking area on the roof!
I think it's all the tech companies just shipping people into town and putting them into any BS building with security that claims to be "luxury".
And that's another problem that has many different causes besides regulations, NIMBYism, and BANANAism. The construction industry never quite recovered after the Great Recession and then COVID happened. Now, everyone in the market for a house is sitting on the sidelines until prices or interest rates come down, so there's no incentive to build anything anyway.
Zoning BS…
Buying houses to rent (short-term, long-term) automatically makes them commercial units in a residential neighborhood.
If only local gov would enforce this…
>Buying houses to rent (short-term, long-term) automatically makes them commercial units in a residential neighborhood.
Renting out to people doesn't make you a commercial unit... Only short term rentals (under 30 days) are considered commercial or "lodging/hospitality".
Anything more than 30 days is just considered residential... You realize most people rent right? A neighborhood is still residential with renters.
Don't forget the 4th head - real estate growing at close to twice the rate of s&p500 in recent years. If you have enough money you can effectively grow it by 18-20 percent annually on average just by buying a house and doing nothing. Some places it's even higher.
The issue is these people have cash and aren't "banks" so fed rates mean very little. The only downward pressure in place is from keeping normies from buying houses, which give Blackrock and co lower prices to continue to vacuum up, creating higher prices in the end. As such, rents keep going up, people keep trying to get a house they can afford, and prices continue to climb. I don't know what the end game is, but the method of "just buy every house possible" is a surefire way to inflate your portfolio as a whole, and these big guys have deep pockets. It will require legislation and probably formation of a new alphabet agency to prevent.
Actually, the Fed does matter...people use cash as leverage to close the deal quickly, THEN they show a lender the rent that it will produce and get the loan to finance this deal, getting 80% of their cash back. Rinse and repeat. How do I know...I've done it. The home I have is currently being occupied by one of my children and rent the second room out. When the child moves out, it will become a rental unit.
Airbnb used to be cool until I dunno something changed. For me I used it for vactioning it's a helluva cheaper to get a home for 4 for a weekend vs a hotel. And it was comfy.
But as time gone on prices slowly rose up those houses for the weekend is like 2k easily yea pause on that now I'm back to hotels lol
It used to be cheaper to AirBnB than even a single hotel room but now it's only cheaper if you're traveling with inlaws, nieces, nephews, etc. and need 3+ bedrooms for a few days. If you just need a single room for a couple nights for you and your wife, a hotel is much better and easier.
Seriously. Some of the hotel sites actually have airBNB style apartments run by management companies that will beat AirBNB prices by a huge margin too.
Last two times I rented in center city Philly I got a sweet little hotel room for $70 a night and then a 1000 sq ft two bedroom apartment for $110 a night off of hotel sites. AirBNB is kinda trash unless you need to stay somewhere with limited options, or you need to be with a big group like you said.
I'm in Ecuador paying 400 a month to a local for a two bedroom. I've seen comparable sized spaces in extremely loud areas (party town) listed at $3000 a month on AirBNB.
If I need to I'll rent a room one night, and then I find a local space to rent.
I've ended up renting the same place at a fraction of the price paid in cash. But I always switch to cash as quickly as possible so AirBNB gets as little of the cut as possible.
are you new to tech companies barely making a profit while leveraging VC funding and then having to pay back and hike prices just for the cycle to start again?
It's a part of the bubble.. the bubble started when the fed attempted to create inflation back in '09/10 and wealthy people poured everything they could into any asset they could.. to protect/benefit from the inflation. We saw massive jumps in all assets if you remember, stocks could only go up, art was hyperinflating, and ofc housing started to climb.
Corporate landlords entrenched themselves into their exploitative business model and bought up 100,000's of properties.. wealthy foreigners were buying up houses as a form of capital flight from their own countries.. Retirees sold their homes easily and at bubbilicious valuations and took a fraction of that to buy downsized houses/condos.
AirBnb was the final kick in inflating housing valuations.. it was the new get rich quick gold rush and ppl recklessly jumped into ridiculously deep debt to obtain any house.. at any cost.. $1500 a night? Why not $2000?... $2500?...
Nobody.. and I mean nobody ever took basic fundamentals into consideration. We have many places where the housing bubble.. thus rents needed.. has inflated WAY beyond the ability of local wages to be able to pay.
So there will probably be a reckoning eventually.. but many ppl will suffer.
We should have just dealt with the depression '08 would have brought instead of trying to inflate back into 'solvency'.
Ok so OP isn’t totally wrong here, but “correlation doesn’t equal causation” is very important in this scenario. AirBnBs/short term rental activity isn’t the only (and is far from the biggest) contributor to housing prices. For example, the average STR in Denver (my market) went from generating $3,300 per month in 2022 to $2,000 in 2023. Less demand for this space has crushed cash flows for a majority of the STR market, and yet home prices remain relatively high.
In simple terms, supply and demand drive housing prices. Sure, AirBnB/STR allows an investor to pay more for certain homes but is heavily restricted depending on your municipality.
Personally, I’ve found the far larger contributor to housing prices are A. Lack of affordable supply and B. Wall Street/Big Money buying long term rentals en masse
A. The process of entitling a piece of land to build houses, apartments, etc takes longer and longer, construction costs keep climbing, and now debt is more expensive. In short, it takes more time and money to build the same house compared to 5+ years ago
B. 1 out of 7 homes in 2022 were purchased by large investment groups specifically to rent on a long term basis (STR is typically not what Wall Street does, they want longer more predictable cash flows without having to invest in furnishings and management like an AirBnB requires.
TLDR: Mom and pop AirBnB operators aren’t able to drive up prices for an entire housing market. The real factors are A. Costs related to time, debt, materials, and labor and B. Institutional investors on Wall Street buying Long Term Rentals.
Source: Local home builder/investor/broker in Denver, masters in real estate
Don’t forget blackstone (the master of REITs). Really does them a favor they have similar names, one hides behind the other saying “not us, them!”. It’s both of them!!!!
I've basically decided to stop using airbnbs. They've gotten just as if not more expensive than hotels with their ridiculous cleaning fees and shit. At hotels I can get my room cleaned every day, can call for help basically 24/7 if I need it, and they usually have a gym and/or pool. Can ask for early check ins, late checkout, and so much more. Airbnb used to make sense when it was cheap, but at current prices it's just dumb. Fuck airbnb
I'm sure AirBnB contributes to some degree, but there aren't enough AirBnB properties to make that big of a move. What % of homes in a typical suburban subdivision are being used as AirBnB?
FALSE. 2006-2008 recession about 2% of houses foreclosed. That drove the market down significantly. How many STR's are there?? It's about 2% and that is just the ones they accounted for....
How much different are gasoline prices when you cut oil production by 5%? When supplies are tight just a few points change in either direction can have a massive impact on pricing.
Just went on Airbnb website to look for CT just for this weekend and there’s over 600, nvm the ones unavailable. I imagine it’s far worse in bigger states / tourist locations. Do with the information as you will.
The phenomena was fueled by low interest rates and compounded by covid. It has already peaked and is in decline in markets where it grew too fast. I don't think much regulatory effort will be needed except in certain localized instances where there is strong intrinsic demand for a destination.
So it’s people setting up Airbnbs that are snatching up houses near me almost as soon as they go up here in rural Minnesota? I’m skeptical.
Are you sure it’s not corporations looking to rent them out for huge money?
It removes housing for locals. All the ltr that used to be out there are now str. Better roi. Airbnb has single handedly caused a housing shortage in last 10 years
I think it is also partly due to a lack of productive investment opportunities in the market.
We haven't invested in growth infrastructure for decades. We've barely invested in maintaining the infrastructure that we already have. The 2008 crash was the signal that our current growth model was failing and needed to be restructured. Instead, we reinflated the stock market with QE and celebrated how we had beat the crash, but we didn't fix the underlying problem of low production growth, we just papered it over with fiscal growth.
Now, there isn't anything really profitable to invest in, but there is a LOT of money in the market, so investors have been turning to real estate as a better ROI than the stock market. No doubt Apps like AirBNB have served to facilitate this transition.
Found this out about 10 years ago when all the cheap cabins that the ski resort employees used to rent to live in for the season virtually all disappeared over one summer to VRBO and Air BnB. I’d probably still be working winters up in the mountains….
We are also at a record low number of persons per household:
https://www.statista.com/statistics/183648/average-size-of-households-in-the-us/
I believe Fred also has a similar chart, but this one was easier to find…
How many posts are AI bots? Why is nobody mentioning the Black Rocks and their ilk buying up properties with all cash. Ever since 2008 there has been a about a 40% all cash purchase of homes.
Rolling stone magazine had an interesting article about this. The CEO of Morgan Stanley took only one dollar of compensation during that year. His wife on the other hand was given a 500m interest free loan from the fed and was instructed to buy properties. She didn't want to buy any properties, but she was told she would be made whole if the property went south. The whole idea was to rebuild the property bubble so the banks would no longer have all of these underwater loans.
Now how are they going to fix CRE. I don't know, but everyone get back to work. In the office. Everyone.
Because ~~stonks~~ house prices only go up! And if there's no homes to buy, people will have to rent, and who will they rent from? The corporations that bought up all the houses lol
Yes it's 100% AirBnB's fault and not at all because of how many people bought or refi'd their houses under 3% and won't let go of that loan with current interest rates as high as they are.
Zoning laws, Airbnb, everyone for 20 years being taught real estate is easy money and watching house flipping shows. How many strip malls / full on malls are dying sitting on acres of land not being used, graveyards waste a ton of space, office buildings vacant for years. There’s plenty of space and ability to accommodate in most parts of the country, just comes down to money.
I’m well aware of this… heavy tourist destinations got hammered by airbnb long before the rest of you did.
There’s also the Zillow, Redfin, rental pricing algorithms, foreign investors, etc… that are fucking shit up
its not the only factor but a big one... its very well known that this real estate market is composed of largest share of rentals in the history of the country. Never before have landlord owned so many properties. The problem with this is that its an overleveraged market where there are too many investors trying to cash in and a significant swath of the rental market is not finding renters to meet their carrying costs. This is why you can expect inventory to steadily increase over the next year as more and more landlords go bust.
Correlation <> causation.
There are 3 fundamental causes of the current housing crisis:
* Interest rate prison (people are not going to leave 2-4% mortgages for 7-8% mortgages w/o corresponding price drops)
* General housing shortage (there are like 4 million homes needed)
* The new homes that get built are too big & expensive.
AirBnB does locally intensify the problem but it's more of a scapegoat for the general housing shortage. If we fix that then AirBnB is no issue.
no, its not.
the housing issue is a supply demand issue
the interests of home owners cut against the interest of non home owners
when you own a home a lot of your wealth is tied up in that asset so you dont like things like multi unit apartments built on your block
just go vote locally for better zoning, mixed zoning. literally you and 10 friends could go take over your local meetings and just put whatever zoning you want to open it up for developers to build more housing.
higher supply will result in lower prices
Zoning goes on this way bc same handful of boomers dominate neighborhood associations and other collective interests and lobby municipalities unchallenged. If u could convince folks of like mind to join you could very likely upend NIMBY types and really solve the problem.
The housing crisis is caused by one major issue, a multi-decade long housing shortage. Voters and residents have elected to making building, environmental and zoning laws to restrictive. Investors of all varieties are all a minor issues. 🧐
I agree with you. This is a major cause of house price inflation.
Besides other reasons who add to the demand side problem, it is also the decrease in house supply.
Cities have been limiting house construction with burocracy and “city improvements policies” that are supposed to increase the quality of life of city residents but that overall make impossible for them to live there.
In the end, cities are becoming a huge condo for tourists and high income people who can get access to all type of city improvements that, surprise surprise, are being paid by all of us.
Local regulations would have certainly helped the issue in the short term, but a recession and over-leveraged dumbasses getting bankrupted is how to fix it in the longterm.
AirBnB is definitely killing many city centers in Europe.
In Portugal, portuguese people can barely afford to live in Lisbon or Porto anymore, they are getting shoved out the city in thousands year after year.
Not only this is bad for the locals, but I also think for the tourists, city centers are losing with each local leaving a bit of authenticity, local shops are moving out for all the Zaras, Sephoras, and yet-another-crap-tourist-bait-restaurant all over.
There is a clear link, however you are looking at a symptom of the problem and not the real problem. People with money or access to cheap money are looking for a good return on their investment. Buy a home for cash to close the deal quickly, put into a rental pool, show the lender you have rent cash flow and finance at 3%, put in the rental pool and most of your monthly payment will be covered and magically in a number of years, you now own the real estate without having to put much of your own money in it. Rinse and repeat. If enough people buy in a market, and then put into the rental market, there will be overabundance of rentals...it will eventually crash the market. Just takes time to let supply and demand run its course. Problem is those are stuck renting long-term are screwed for a while.
Stupid low interest rates were the real fuel to this fire. Rather than letting our economy run its cycle, the Fed (with support of government) felt we had to keep people from feeling the pain of a recession and artificially spur the economy with low interest rates. The people they thought they were protecting got screwed anyway, just a few years later. You cannot escape the ebb and flow of the economic cycle, delaying that pain only makes it worse later. We haven't seen the worst of this yet unfortunately. I expect there will be a housing market crash coming as the Fed continues to battle inflation, over doing the rate increases. Some of those who bought into the housing craze will see rents decline, home values decline, and they will start to puke out those housing purchases as their investment doesn't cover their costs.
I lived in small southern winter- destination town and almost every home and condo over the last several years which would have been long term rentals converted to AirBNB - the locals had no housing. None. A few apt complexes began to go up but not enough to manage the needed homes for long term rentals. It was a nightmare. These units sat empty off season yet housing was desperately needed for locals. The long-term rental rates (which were rare) quadrupled to stay in line with AirBNB rates.
Airbnb is not the only cause of the housing shortage.
After the 2008 financial crisis, there were a lot of foreclosed homes on the market. Because of the oversupply of homes, fewer then what would be normal for population growth were being built. Until demand caught up with the oversupply, less new homes were built.
Air BnB only works because people want it. Supply and demand.
Reduce supply by some means and the demand isn't going anywhere. A normal family ain't paying for an expensive hotel suit or putting their kids in completely separate rooms with no private areas for themselves to hang out as a family. People will just find a way around it.
Income from an air BnB is just that and already taxed.
Demand for air BnBs is just as valid as demand for a home to live in. There just aren't enough properties to supply total demand at reasonable prices.
Perhaps hotels should adapt and compete better for the use case.
Correlation is not causation. This could easily be explained with supply and demand. You are talking about the same supply of houses while demand for residential property has increased. Of course the graphs will correlate. Come on people
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|3|**First Seen In WSB**|1 year ago **Total Comments**|47|**Previous Best DD**| **Account Age**|7 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
There is also a huge problem with foreign buyers buying investment properties, money laundering through real estate, and investors bidding up the markets (iBuyers like Redfin and Zillow). The whole system is a mess.
Not just "money laundering". A lot of basic "wealth parking" by Russians and Chinese in particular. When you don't trust where you are, buy US real estate to park your cash.
Aka the reason there’s a bunch of new luxury apartments in the ghetto
I believe trump passed some real estate development gift to his buddies & Jared in those areas if I recall. I don’t remember the details anymore but when I read it I knew it was billionaire handout bullshit
Opportunity zones.
That was it, thanks “opportunities for all!” Right…
If i remember correctly they used 2000 census data to designate opportunity zones. One place where i live was designated that and legit it was bought up by a developer in 2010 and is now one of the most expensive places to live. It was meant to help struggling regions but the data they used was stale
This has been a huge issue for years. NYTs had an article about this in.. 2014... maybe sooner. Wealthy Chinese have been using the US housing market, especially on the west coast, to pay each other and park money out of reach of the Chinese government. It got so bad in Vancouver that BC put something like a 10+% tax on foreign buyers.. or something like that. It didn't stop anything, they just opened up Canadian and US based companies and continued to buy.
I don’t blame them actually. Normal human survival behavior. If you think your state is unstable and/or corrupt, you absolutely have to put some percentage of your assets out of reach, for your family if not for you. Just so happens U.S. real estate is cheap (relative to rest of world) and safe and even with the GFC, pretty damned stable.
They are also buying US farm land at an alarming rate. I need to find the article on it.
Ah yeah, the alarmist stuff. Great thing about foreigners buying property, they can't take it with them if/when there is time of war. I worry more about IP (intellectual property) than farmland that can't be moved.
They can take the water and the crops grown with it. https://www.motherjones.com/environment/2021/06/foreign-companies-export-virtual-water-american-drought-southwest/ https://apnews.com/article/water-foreign-farms-arizona-drought-saudi-arabia-2fe3ea1fad43b14ca118cf85196f3e9a
Honestly I don't know why this isn't a bigger deal. Only fringe politicians on the right are talking about this while the liberals are spinning it as racism. Nobody gives a fuck if someone from China or India or wherever is buying a vacation home in the US. But when half of California's apartments are being bought up by Chinese firms, I don't see how this isn't a bigger problem. We've got rent coming out of Americans pockets and going into the pockets of a foreign adversary.
The largest lobbying group is the National Association of Realtors, so that might have something to do with it. Also, local governments get more tax revenue as a result of the higher prices, so they aren't rushing to stop it either.
This. You should run for office. You hit the nail on the fucking head.
And the hedge funds, rich people gobbling up real estate to diversify. It happened a lot during Covid. Unfortunately it’s screwed everyone who didn’t buy early enough, or wasn’t at the proper place to do it, now they’re priced out. Crack down on the investment property, international money bullshit & rents come down. Employers stop bitching about their employees wanting a livable wage because they can’t afford rent, a problem that many had a hand in creating. The misconception is business owners who make money are smart, which is definitely not the case in my experience working in B to B for the last 25 yrs.
A house across the street from me was sold for almost 100% over the asking price and then listed it for rent immediately. About 6 months later, the house changed title ownership and the record showed that it "sold" for 10X the amount. It's got to be some kind of mortgage fraud or money laundering, but how can they do it when records are public? Which agency should I report it to, FBI? FTC?
Who needs foreign buyers when PPP created local buyers (US practically giving $1 trillion - the same amount of US credit card debt to corporations).
You’ll own nothing and be happy! Brought to you by the WEF globalis… oh wait, shit, this is just regular neoliberal deregulated capitalism.
Housing is extremely regulated. Don't throw this on the freemarket between. Zoning Strict building regulations and licensing Localized price controls, and/or tax controls Housing isn't being built fast enough in the high demand areas, mostly because of grinding regulation and zoning committees that makes everything take a good bit of time and effort.
Airbnb snuck into a regulatory deadspace tho and def contributed to issues. Hard to say how much vs zoning and building issues without googling.
You seem to know a lot about real estate market so maybe you can help me square this one since I don’t know much about the market. I heard that we can’t fully blame the government and regulations for the housing shortage in some areas because the residents vote on whether there can be new developments or not. A lot of times, the residents vote against new developments in order to maintain the property value of their homes. For example, i heard that this type of situations happen a lot in San Francisco/ Bay area. Would you say that is an accurate assessment or there is something more to it?
It's a good number of factors, and individually one by one they make a good bit of sense, it's when collected into a group that they cause their problems. Also yeah a good bit of zoning decisions are very local government decisions, and if you live there you can actually have a good bit of influence on them. Compared to more state/national politics where it's very difficult for you personally to make an individual difference. I personally they are thinking less about property value and more a giant increase in traffic or noise pollution, but it really depends on the person.
You are correct. In order to keep property value high, residents will band together and hire an attorney to file lawsuits against any development approved by the local planning commission. In wealthy areas they will go to any lengths to stop building near them. Recently a private school stood on its head to stop the construction of seniors community next to them (open land) to 'save their view'. There was a 500K settlement agreed to for 'future school needs' to get them to stop filing suits.
Yea nimbyism is a huge issue in a lot of markets. People with homes don’t want anyone else to have a home in their neighborhood for various reasons, some understandable, some just incredibly selfish.
when the nimby bought a house they bought that neighbourhood and its density. so any normal human being (has a right?) would not want that density increased and stuffed with bullshit new homes so a developer can make money. they call it nimby but its just fucking common sense.
But the problem is that they bought there before me! And I want the same deal they got. HMPF!!! That said, everybody needs to just stop throwing SF out as an example to debate policy around. Not that many places so high in demand (at the pace of most of 1999-2019, my god the pace of demand), naturally bounded, and characterized by quite the same unit density / tenant protections....
When they buy a fairly new house next to undeveloped land that is not deed-restricted, they know it's open to development. But they got theirs, screw anybody else. They don't want to pay for the land, but they don't want anyone else to have anything on it.
This is the correct answer the biggest problem is government restricting housing, driving up cost it's unbelievable all the fees and regulation hello people
Here in irvine, orange county CA, there are so many foreign buyers and investment banks. The buyers come here staying in airbnb and go home shopping. Banks are flipping homes for 10~15% more in less than a week from closing and back in the market. You hear so many incidents where you reserve airbnb single home or town home unit, you go there and turns out either someone else is living or occupying. Airbnb owner hires multiple agents ends up double booking or forgot to update the listing that it was sold. So bad here… to the scary level that what if one day, they all pull back cause they can’t payback interest in their country and trigger sale rush. Just like panic selling in stock. Things are going to be bad….. Only the locals who bought with 1% interest will be watching the crash eating popcorn.
Zillow and redfin are cartels. I cannot fathom how they are still in business and crowds with pitchforks and torches haven’t gathered outside their offices yet
Trump: I could find a Saudi buyer that would pay a billion dollars for Mar a Lago today
Other than the money laundering part, that's just Capitalism, baby!
A lot of money has come into the US into real estate. If you invest enough you get to be a citizen too… system is indeed broken
> If you invest enough you get to be a citizen too… system is indeed broken Most countries have a program like this. Citizenship through investment.
So maybe I should have shared a little more info. I’m not going to name the country…. A certain foreign government recruits its citizens to go overseas and loads them up with capital. The goal is to land into the US and buy real assets. Homes, businesses, etc. foreign citizen shows up starts buying stuff. Ding ding ding invested enough to be granted a green card. This foreign citizen is in America at the leisure of their government. Whatever assets were purchased don’t really belong to the person but their government. They can enjoy these assets while they are here but at any moments notice they can be called back to their home country. If they choose not to go you can imagine what happens next. The shitty part here is that there’s a lot of them coming and buying up a lot of stuff in the US. Effectively blackballing actual citizens from being able to buy homes at reasonable prices or even businesses. The same things happening in Canada. It’s kind of economic warfare if you think about it. The US is quietly being bought out by this foreign government
No arguments there.
India or China
It's both.
Def not India
China. India doesn't have such a system in place. I know as I am a born Indian Citizen, became a US Citizen through the Dual Citizenship program, and then became an Overseas Citizen of India when that program was dissolved. We don't need to buy homes in any country, we have better opportunities back home. Our govt back in India wants us to remain in the country to develop it further, rather than move elsewhere. However, I can tell you that people from Pakistan and Bangladesh seem to have their hands on the idea of making as much money possible, with as little work done as humanly possible. Their societies require and promote the idea of multiplying wherever, whenever. Whether it be in wives, children, or houses. I know of 3 separate Bangladeshi families who have 3+ homes each, and 4+ children per legal wife. I also know of 2 Pakistani households whose head lives with 2-3 women, all of which, who he has children with, claims one is the legal wife, and the one or 2 other women are "cousins" or "extended family". They collect child support on all of them. Edit: Didn't mean for this to be politically or religiously targeted. But that seems to be how the cookie crumbles. Not all people who are from those countries do that, just those special few.
nah.. its not a grand govt plan.. people who are making money there are parking their assets outside in case govt turns on them.. which they tend to do every now and then..
[удалено]
> Even at the furthest extremes of capitalism, no one benefits if your “customers” can’t even afford your “product”. That's the thing though, they can. If no one was buying houses for 4x what they're really worth, they wouldn't be selling them for those prices. The problem is that there is a small number of people who are rich enough to afford them, but there's also a small number of livable homes actually available - so that market and those people are basically at parity. Everyone else below that Cool Kids Club is in a caste and living 5-people-to-a-mobile-home and struggling to survive who are forced to be eternally fighting in the pit in a never-ending Dangling Cash Suitcase ladder match.
True. I was using a bit of hyperbole just to simplify things. The housing market didn’t used to be like this though. Regulation can help fix what’s broken more than anything else
Regulation that absolutely includes making short term vacation housing illegal, like AirBnB. Which, sucks for AirBnB I guess, but they’re objectively profiting off of homeless people in the most direct sense possible. That, or taxing the hell out of those homes and putting it toward low cost housing for low income families. Simple, but the real estate, gas, entertainment, tourism and local state lobbies don’t want Washington DC to do that, so it probably won’t. Florida freaks will in the same sentence talk about MUH HOMELESS IN PORTLAND!!!! and then go to Orlando and stay in a Chinese-shadow investor house that is unoccupied 75% of the month to visit Disneyworld and stuff their fat faces. This country blows, man.
Housing in the boom areas is correcting, right now, ever month. Housing prices are not stocks though, they take years to correct to fair pricing when there even is a correction. I do agree though, that an entire generation of people have completely sold out another, younger entire generation of people.
That’s the rub, say you finally go to sell your home, a housing crisis is hot in the city you’ve lived in for 35 years and your house you paid 500k for is selling for 2mill, you going to walk away from that cash?
money laundering is super part of capitalism.
Late stage capitalism FTW!
you are in the wrong part of reddit pal
Yeah, this is the part of reddit where we blindly pretend we aren't in late stage capitalism as we lose $2000 over and over every year.
Oh well, better get mad about a single Apple store being looted by *those people* instead.
[удалено]
Also can’t forget the whole thing where illegal immigrants undermine centuries of wage and labor right progressions that Americans literally fought battles for “But people don’t want to work those jobs anyway!!!!” Well yeah. Americans don’t want to work those jobs because they’re way underpaid, and a very large reason why is because there are hundreds of thousands of newly found people willing to work for so cheap that it’s literally illegal to be paid that little. Go through the system properly and everyone wins, you get paid like the American you now are and everyone else doesn’t have decades of progression of their wage and labor ruined
Hispanic immigrants in LA pretty much completely displaced the historical black population out of all its neighborhoods and they took over a lot of work and businesses that blue collar black men used to do.
The refugees didn't do that. The capital owners who are hiring them did.
Yeah, and the only reason why the “capital owners” have the option in the first place is because of the constant influx of a large amount of illegal immigrants. If they didn’t they would have no choice but to cater to demands in which gives workers more power and rights. I just think it’s so fucking wild how this country has a wage and working rights issue already, and instead of doing something about it let’s import thousands of people to treat even shittier because we can’t treat Americans that way. And y’all with this logic think you’re the moral ones lol
this is such a brain dead take since CAPITAL OWNERS lobbied congress to remove migrant workers protections for seasonal jobs, like the agriculture industry. in the past, migrant workers would come to places like CA, work a season, make good money, have worker protections, and then leave to their homes. Now, our dogshit policies keep migrant workers IN. Suppressing wages and forcing a permanent underclass with no protections to retaliate against dog shit capital owners. Let me guess, you want a big beautiful wall built as well?
That happened in the 1970s. I forgot who started it, but it was some military figure. You're correct though. They don't actually want to live here. But re-entry for seasonal work became so cumbersome it became easier for migrant workers to just stay here and send money back to their families in Latin America.
I have a super hard time getting mad at people who are fleeing violence, oppression, and otherwise shitty living conditions that our country directly or indirectly caused in their homelands, for the fact that they are being shamelessly and criminally exploited here. Easier, in my opinion, to get mad at the business owners that profit by capturing extra value through illegally underpaying them. The people "importing" immigrants (which is who, exactly?) aren't the same as the assholes taking advantage of them. Honestly throw those dickbags in jail and donate their businesses to the immigrants, they're doing all the damned work anyway. Just my opinion though bud, you do you.
The capital owners are forced to use cheap labor, or go out of business. Anyone not using cheap labor has to charge customers more to pay for the local labor. Customers then flock like psychopaths to the guy exploiting illegal workers as the cost to them is lower. Hands up if anyone here is happy paying more because the labor is legal?
Capital owners couldn't possible take a reduction in pay. They must have generational wealth the likes of which the average person cannot comprehend or they'll literally starve.
And these broke illegals are affording homes?
No but they're certainly competing with you for rent.
I can’t tell who’s being ironic here but they do obviously utilize housing, although usually crammed in more to a house than typical Americans Source : my extended family
WTF are you on about goofy? Who do you think is providing the cheap labor to build the actual homes needed to combat the housing shortage? Lol I'm sure a lot of Guatemalan immigrants are swooping in to buy $600,000 houses with no line of credit and no traceable income source. Go back to your Q'anon message boards and find a new outrage issue.
They came here because Guatemala was to small of a country to hold all the prosperity.
oh yes let's blame the illegals with their billions of dollars for buying up all the starter homes and renting them out it's a never ending circus with you people. immigration is fuel for our economy, gets jobs done no American wants to do and helps keep our already aging top heavy society less imbalanced than Japan, Europe and China and many other developed societies getting crushed by the demographics of a retiree heavy society illegal immigration occurs and occured under every president including Mr let's build a wall.. just get over it already
legal immigration that brings the best and brightest of the world can be a boom for the economy. illegal immigration that brings the poorest of the peasants who lack any high education is not a boom to the economy. In fact, it's a net negative as those same people, and their children will be trapped in generational poverty while being dependent on the government to meet their basic needs. Dont conflate the two.
It’s so easy to fix too and the system is already in place in several states. Raise real estate taxes and provide a generous homestead tax credit for your primary residence. Then property investors will help fund your local government services. It will also make home prices more reasonable.
Actually…this is a 3 headed monster… - AirBNB buying houses for short-term rent - Finance companies buying houses for longer-term rent - Foreign buyers blatantly laundering money
I like how no one blames the cities making it hard/impossible to build new units.
It’s no longer NIMBY, it’s BANANA - build absolutely nothing anywhere near anyone.
In LA it's build absolutely everywhere and then try and charge 80% higher than the older buildings while providing 60% of the square footage, and fewer amenities. But hey we've got a dog walking area on the roof! I think it's all the tech companies just shipping people into town and putting them into any BS building with security that claims to be "luxury".
Long acronym there
"BAEATTAC%80HTTOBWP%60OTSFAFABHWGADWAOTR!" Not sure how to pronounce that one
😂 well done.
dog walk on roof sounds cool Ima look into it
It’s piss soaked astroturf baked in the SoCal sun, the shine will come off pretty quick.
Amazon HQ2 in Virginia lol Straight through a 8 lane highway
Funded by the deep state aka Gwen Stefani
This guy has got it. Sure property prices are skyrocketing, but there is simply very little building to meet demand
And that's another problem that has many different causes besides regulations, NIMBYism, and BANANAism. The construction industry never quite recovered after the Great Recession and then COVID happened. Now, everyone in the market for a house is sitting on the sidelines until prices or interest rates come down, so there's no incentive to build anything anyway.
Which every study on the matter shows accounts for 90% of housing price rises...but no one wants to admit it for some reason.
Zoning BS… Buying houses to rent (short-term, long-term) automatically makes them commercial units in a residential neighborhood. If only local gov would enforce this…
>Buying houses to rent (short-term, long-term) automatically makes them commercial units in a residential neighborhood. Renting out to people doesn't make you a commercial unit... Only short term rentals (under 30 days) are considered commercial or "lodging/hospitality". Anything more than 30 days is just considered residential... You realize most people rent right? A neighborhood is still residential with renters.
Don't forget the 4th head - real estate growing at close to twice the rate of s&p500 in recent years. If you have enough money you can effectively grow it by 18-20 percent annually on average just by buying a house and doing nothing. Some places it's even higher.
I think (hope) that era is just about over. Let JPow choke these mofos out.
The issue is these people have cash and aren't "banks" so fed rates mean very little. The only downward pressure in place is from keeping normies from buying houses, which give Blackrock and co lower prices to continue to vacuum up, creating higher prices in the end. As such, rents keep going up, people keep trying to get a house they can afford, and prices continue to climb. I don't know what the end game is, but the method of "just buy every house possible" is a surefire way to inflate your portfolio as a whole, and these big guys have deep pockets. It will require legislation and probably formation of a new alphabet agency to prevent.
Actually, the Fed does matter...people use cash as leverage to close the deal quickly, THEN they show a lender the rent that it will produce and get the loan to finance this deal, getting 80% of their cash back. Rinse and repeat. How do I know...I've done it. The home I have is currently being occupied by one of my children and rent the second room out. When the child moves out, it will become a rental unit.
[удалено]
Airbnb used to be cool until I dunno something changed. For me I used it for vactioning it's a helluva cheaper to get a home for 4 for a weekend vs a hotel. And it was comfy. But as time gone on prices slowly rose up those houses for the weekend is like 2k easily yea pause on that now I'm back to hotels lol
It's when they started making you do all the chores and also made you pay a $300 cleaning fee
It was when my Airbnb host lived in the backyard and would randomly come in to shower. That did it for me.
I bet it did ;)
The last AirBNB I rented didn't even have toilet paper or hand towels. And they demanded checkout by 10 AM.
Yea, but you get to keep the weed collected by the Roomba…
It used to be cheaper to AirBnB than even a single hotel room but now it's only cheaper if you're traveling with inlaws, nieces, nephews, etc. and need 3+ bedrooms for a few days. If you just need a single room for a couple nights for you and your wife, a hotel is much better and easier.
Seriously. Some of the hotel sites actually have airBNB style apartments run by management companies that will beat AirBNB prices by a huge margin too. Last two times I rented in center city Philly I got a sweet little hotel room for $70 a night and then a 1000 sq ft two bedroom apartment for $110 a night off of hotel sites. AirBNB is kinda trash unless you need to stay somewhere with limited options, or you need to be with a big group like you said.
Remember which hotel site?
[удалено]
I do monthly but to be fair the deal you got is ridiculously good.
This is actually smart af. You cracked the code.
Nah cracking the code is then listing the other 3 weeks as an airbnb and get 1400$ to pay for ur week.
[удалено]
rofl i love this sub
Vrbo it then. Or one of the other million wannabe airbnbs
Yep, all those hidden fees!
I'm in Ecuador paying 400 a month to a local for a two bedroom. I've seen comparable sized spaces in extremely loud areas (party town) listed at $3000 a month on AirBNB. If I need to I'll rent a room one night, and then I find a local space to rent. I've ended up renting the same place at a fraction of the price paid in cash. But I always switch to cash as quickly as possible so AirBNB gets as little of the cut as possible.
are you new to tech companies barely making a profit while leveraging VC funding and then having to pay back and hike prices just for the cycle to start again?
It's a part of the bubble.. the bubble started when the fed attempted to create inflation back in '09/10 and wealthy people poured everything they could into any asset they could.. to protect/benefit from the inflation. We saw massive jumps in all assets if you remember, stocks could only go up, art was hyperinflating, and ofc housing started to climb. Corporate landlords entrenched themselves into their exploitative business model and bought up 100,000's of properties.. wealthy foreigners were buying up houses as a form of capital flight from their own countries.. Retirees sold their homes easily and at bubbilicious valuations and took a fraction of that to buy downsized houses/condos. AirBnb was the final kick in inflating housing valuations.. it was the new get rich quick gold rush and ppl recklessly jumped into ridiculously deep debt to obtain any house.. at any cost.. $1500 a night? Why not $2000?... $2500?... Nobody.. and I mean nobody ever took basic fundamentals into consideration. We have many places where the housing bubble.. thus rents needed.. has inflated WAY beyond the ability of local wages to be able to pay. So there will probably be a reckoning eventually.. but many ppl will suffer. We should have just dealt with the depression '08 would have brought instead of trying to inflate back into 'solvency'.
Should have also imprisoned the people responsible for 2008.
Yes this. White collar crime seems to be glorified in this country.
Seems to be? It’s glorified in media and film all the time… succession? Wolf of Wall Street?
Here…
What laws were broken? Most of what happened in '08 was perfectly legal (some of it not anymore).
Rating agencies were committing fraud. Pretty sure that’s a law.
Last I checked fraud is a pretty massive crime
Sir this is WSBs. That was far far too sensible.
Ok so OP isn’t totally wrong here, but “correlation doesn’t equal causation” is very important in this scenario. AirBnBs/short term rental activity isn’t the only (and is far from the biggest) contributor to housing prices. For example, the average STR in Denver (my market) went from generating $3,300 per month in 2022 to $2,000 in 2023. Less demand for this space has crushed cash flows for a majority of the STR market, and yet home prices remain relatively high. In simple terms, supply and demand drive housing prices. Sure, AirBnB/STR allows an investor to pay more for certain homes but is heavily restricted depending on your municipality. Personally, I’ve found the far larger contributor to housing prices are A. Lack of affordable supply and B. Wall Street/Big Money buying long term rentals en masse A. The process of entitling a piece of land to build houses, apartments, etc takes longer and longer, construction costs keep climbing, and now debt is more expensive. In short, it takes more time and money to build the same house compared to 5+ years ago B. 1 out of 7 homes in 2022 were purchased by large investment groups specifically to rent on a long term basis (STR is typically not what Wall Street does, they want longer more predictable cash flows without having to invest in furnishings and management like an AirBnB requires. TLDR: Mom and pop AirBnB operators aren’t able to drive up prices for an entire housing market. The real factors are A. Costs related to time, debt, materials, and labor and B. Institutional investors on Wall Street buying Long Term Rentals. Source: Local home builder/investor/broker in Denver, masters in real estate
The prices remain high because those whose cash flow is being crushed haven’t been forced to sell yet. That day is coming.
Wait'll the OP learns about Blackrock's purchases
Don’t forget blackstone (the master of REITs). Really does them a favor they have similar names, one hides behind the other saying “not us, them!”. It’s both of them!!!!
In nyc they banned short term rentals for AirBnBs without a license so we’ll be able to see in a couple months how big of an effect it has.
Yes, I'm very curious!
I've basically decided to stop using airbnbs. They've gotten just as if not more expensive than hotels with their ridiculous cleaning fees and shit. At hotels I can get my room cleaned every day, can call for help basically 24/7 if I need it, and they usually have a gym and/or pool. Can ask for early check ins, late checkout, and so much more. Airbnb used to make sense when it was cheap, but at current prices it's just dumb. Fuck airbnb
Something, something correlation and causation. Also, the way you inlaid the airbnb chart is disgusting.
Let’s get the TA boyz in here. That’s just a straight line with a couple of trips and dips.
Agreed, but even a regard can be right sometimes lol
Yep, but it isn’t this time!
It’s not Airbnb. It’s foreign investment. Why is it that purchasing property in almost every country requires residency but not in the US???
I'm sure AirBnB contributes to some degree, but there aren't enough AirBnB properties to make that big of a move. What % of homes in a typical suburban subdivision are being used as AirBnB?
FALSE. 2006-2008 recession about 2% of houses foreclosed. That drove the market down significantly. How many STR's are there?? It's about 2% and that is just the ones they accounted for....
It was more than just foreclosures that drove the market down.
How much different are gasoline prices when you cut oil production by 5%? When supplies are tight just a few points change in either direction can have a massive impact on pricing.
Just went on Airbnb website to look for CT just for this weekend and there’s over 600, nvm the ones unavailable. I imagine it’s far worse in bigger states / tourist locations. Do with the information as you will.
The impact is definitely greater in more touristy areas.
The phenomena was fueled by low interest rates and compounded by covid. It has already peaked and is in decline in markets where it grew too fast. I don't think much regulatory effort will be needed except in certain localized instances where there is strong intrinsic demand for a destination.
So it’s people setting up Airbnbs that are snatching up houses near me almost as soon as they go up here in rural Minnesota? I’m skeptical. Are you sure it’s not corporations looking to rent them out for huge money?
That absolutely is happening as well
Oh, in that case fuck them Airbnb’s.
AirBBC cause we’re getting fucked by them.
It removes housing for locals. All the ltr that used to be out there are now str. Better roi. Airbnb has single handedly caused a housing shortage in last 10 years
I think it is also partly due to a lack of productive investment opportunities in the market. We haven't invested in growth infrastructure for decades. We've barely invested in maintaining the infrastructure that we already have. The 2008 crash was the signal that our current growth model was failing and needed to be restructured. Instead, we reinflated the stock market with QE and celebrated how we had beat the crash, but we didn't fix the underlying problem of low production growth, we just papered it over with fiscal growth. Now, there isn't anything really profitable to invest in, but there is a LOT of money in the market, so investors have been turning to real estate as a better ROI than the stock market. No doubt Apps like AirBNB have served to facilitate this transition.
Found this out about 10 years ago when all the cheap cabins that the ski resort employees used to rent to live in for the season virtually all disappeared over one summer to VRBO and Air BnB. I’d probably still be working winters up in the mountains….
Hedge funds owning property along with years of low interest commerical loans is the direct cause of the housing crisis.
We are also at a record low number of persons per household: https://www.statista.com/statistics/183648/average-size-of-households-in-the-us/ I believe Fred also has a similar chart, but this one was easier to find…
How many posts are AI bots? Why is nobody mentioning the Black Rocks and their ilk buying up properties with all cash. Ever since 2008 there has been a about a 40% all cash purchase of homes. Rolling stone magazine had an interesting article about this. The CEO of Morgan Stanley took only one dollar of compensation during that year. His wife on the other hand was given a 500m interest free loan from the fed and was instructed to buy properties. She didn't want to buy any properties, but she was told she would be made whole if the property went south. The whole idea was to rebuild the property bubble so the banks would no longer have all of these underwater loans. Now how are they going to fix CRE. I don't know, but everyone get back to work. In the office. Everyone.
The real problem is companies like Blackrock, Vanguard etc.. If they keep buying at the current rate, they’ll own 60% of single family homes by 2030.
>the real problem Theres no single thing to blame, but that's definitely one of the factors. It's just a perfect shitstorm of greed all around.
Because ~~stonks~~ house prices only go up! And if there's no homes to buy, people will have to rent, and who will they rent from? The corporations that bought up all the houses lol
Yes it's 100% AirBnB's fault and not at all because of how many people bought or refi'd their houses under 3% and won't let go of that loan with current interest rates as high as they are.
Zoning laws, Airbnb, everyone for 20 years being taught real estate is easy money and watching house flipping shows. How many strip malls / full on malls are dying sitting on acres of land not being used, graveyards waste a ton of space, office buildings vacant for years. There’s plenty of space and ability to accommodate in most parts of the country, just comes down to money.
True but strip malls and office buildings are zoned for commercial property.
I’m well aware of this… heavy tourist destinations got hammered by airbnb long before the rest of you did. There’s also the Zillow, Redfin, rental pricing algorithms, foreign investors, etc… that are fucking shit up
It's most likely the other way around: the housing crisis bubble is causing more AirBNBs.
In other news, wet streets cause rain Have you considered that Airbnb demand is caused by high house prices and tight rental markets?
its not the only factor but a big one... its very well known that this real estate market is composed of largest share of rentals in the history of the country. Never before have landlord owned so many properties. The problem with this is that its an overleveraged market where there are too many investors trying to cash in and a significant swath of the rental market is not finding renters to meet their carrying costs. This is why you can expect inventory to steadily increase over the next year as more and more landlords go bust.
Well said!
Correlation <> causation. There are 3 fundamental causes of the current housing crisis: * Interest rate prison (people are not going to leave 2-4% mortgages for 7-8% mortgages w/o corresponding price drops) * General housing shortage (there are like 4 million homes needed) * The new homes that get built are too big & expensive. AirBnB does locally intensify the problem but it's more of a scapegoat for the general housing shortage. If we fix that then AirBnB is no issue.
no, its not. the housing issue is a supply demand issue the interests of home owners cut against the interest of non home owners when you own a home a lot of your wealth is tied up in that asset so you dont like things like multi unit apartments built on your block just go vote locally for better zoning, mixed zoning. literally you and 10 friends could go take over your local meetings and just put whatever zoning you want to open it up for developers to build more housing. higher supply will result in lower prices
Zoning goes on this way bc same handful of boomers dominate neighborhood associations and other collective interests and lobby municipalities unchallenged. If u could convince folks of like mind to join you could very likely upend NIMBY types and really solve the problem.
AirBNB affects supply and demand. A house being used as a vacation rental takes a potential single family home "off the market."
not nearly as much as you think
The housing crisis is caused by one major issue, a multi-decade long housing shortage. Voters and residents have elected to making building, environmental and zoning laws to restrictive. Investors of all varieties are all a minor issues. 🧐
Turn the graph upside down and that solved everything
The level of DD on this sub never fails to amaze me
I agree with you. This is a major cause of house price inflation. Besides other reasons who add to the demand side problem, it is also the decrease in house supply. Cities have been limiting house construction with burocracy and “city improvements policies” that are supposed to increase the quality of life of city residents but that overall make impossible for them to live there. In the end, cities are becoming a huge condo for tourists and high income people who can get access to all type of city improvements that, surprise surprise, are being paid by all of us.
Local regulations would have certainly helped the issue in the short term, but a recession and over-leveraged dumbasses getting bankrupted is how to fix it in the longterm.
Zillow should be shut down for manipulative practices and people should go to prison
I cannot think of a greater example of price fixing
Foreign buying should have been banned years ago
What I can’t stand are the scammers taking out leases on properties and then sub letting them on air bnb. That should be made illegal.
no shit
Great, let's do something about it!
Hilton and Marriott thank you!
Potential allies! Haha
AirBnB is definitely killing many city centers in Europe. In Portugal, portuguese people can barely afford to live in Lisbon or Porto anymore, they are getting shoved out the city in thousands year after year. Not only this is bad for the locals, but I also think for the tourists, city centers are losing with each local leaving a bit of authenticity, local shops are moving out for all the Zaras, Sephoras, and yet-another-crap-tourist-bait-restaurant all over.
There is a clear link, however you are looking at a symptom of the problem and not the real problem. People with money or access to cheap money are looking for a good return on their investment. Buy a home for cash to close the deal quickly, put into a rental pool, show the lender you have rent cash flow and finance at 3%, put in the rental pool and most of your monthly payment will be covered and magically in a number of years, you now own the real estate without having to put much of your own money in it. Rinse and repeat. If enough people buy in a market, and then put into the rental market, there will be overabundance of rentals...it will eventually crash the market. Just takes time to let supply and demand run its course. Problem is those are stuck renting long-term are screwed for a while. Stupid low interest rates were the real fuel to this fire. Rather than letting our economy run its cycle, the Fed (with support of government) felt we had to keep people from feeling the pain of a recession and artificially spur the economy with low interest rates. The people they thought they were protecting got screwed anyway, just a few years later. You cannot escape the ebb and flow of the economic cycle, delaying that pain only makes it worse later. We haven't seen the worst of this yet unfortunately. I expect there will be a housing market crash coming as the Fed continues to battle inflation, over doing the rate increases. Some of those who bought into the housing craze will see rents decline, home values decline, and they will start to puke out those housing purchases as their investment doesn't cover their costs.
I lived in small southern winter- destination town and almost every home and condo over the last several years which would have been long term rentals converted to AirBNB - the locals had no housing. None. A few apt complexes began to go up but not enough to manage the needed homes for long term rentals. It was a nightmare. These units sat empty off season yet housing was desperately needed for locals. The long-term rental rates (which were rare) quadrupled to stay in line with AirBNB rates.
Airbnb is not the only cause of the housing shortage. After the 2008 financial crisis, there were a lot of foreclosed homes on the market. Because of the oversupply of homes, fewer then what would be normal for population growth were being built. Until demand caught up with the oversupply, less new homes were built.
Air BnB only works because people want it. Supply and demand. Reduce supply by some means and the demand isn't going anywhere. A normal family ain't paying for an expensive hotel suit or putting their kids in completely separate rooms with no private areas for themselves to hang out as a family. People will just find a way around it. Income from an air BnB is just that and already taxed. Demand for air BnBs is just as valid as demand for a home to live in. There just aren't enough properties to supply total demand at reasonable prices. Perhaps hotels should adapt and compete better for the use case.
air bnb is going to be fully fucked within 5 years.
There’s a huge flaw in your reasoning here. You need to take an economics class. I can try to explain it if you’re interested.
I do love AirB-N-B though - I haven’t stayed in a hotel in years and years
Agree 10000%, Airbnb can suck my microdick
Yes it is
I was surprised by how the two graphs linked up
Correlation is not causation. This could easily be explained with supply and demand. You are talking about the same supply of houses while demand for residential property has increased. Of course the graphs will correlate. Come on people