Judge rejects Airbnb bid to halt San Francisco ordinance
reuters.com
reuters.com
I for one have always enjoyed using the service, but am thoroughly convinced that allowing the rental of entire suites is having a considerable impact on local housing availability.
This is going on in San Francisco, but I don't think to quite the same extent as what was happening in Berlin. I made a trip there a year and a half back where I stayed at about five different AirBnB units over a three week period. It was quite obvious that every one of them without exception was "professional" in that they were reserved for use by AirBnB 100% percent of the year and oftentimes had paid clean up crews who were _not_ the owner. I did speak to one owner about it, and he said that he was now running this unit along with four others full time on AirBnB. In a world without this option, it's hard to believe that these wouldn't have been normal rental stock.
Recently the city passed Zweckentfremdungsverbot [1] to help counteract the effect. Nowadays AirBnB is still allowed, but only for single rooms in shared units. This strikes me as exactly the right balance.
[1] https://www.theguardian.com/technology/2016/may/01/berlin-au...
AirBnB is a distribution channel, not a business model.
No, but unfortunately the majority are (at least where I am), and AirBnB has a vested interest in ensuring that they don't have to make sure their listings are legal, and their customers don't care.
AirBNB is a great idea if you're renting out your space (and I've stayed at several like that; either where they're in the house with you or one guy in The Netherlands who just stayed with his girlfriend on the weekends he rented his place out). But of course, just like eBay, you'll get a mix of people just selling their stuff and people who make a business out of it; writing their own fulfilment and drop shipping software against the eBay APIs.
I really like this post referring to Uber/AirBNB/et. al. as the "bullshit sharing economy":
http://grist.org/politics/the-sharing-economy-is-bullsht-her...
As a thought experiment, pretend that every home in San Fran was an AirBnB. What would happen? The demand would drop and landlords would then begin leasing their places out to where the AirBnB demand and the leasing demand was at equilibrium -- assuming San Fran allows new housing supplies to enter the market.
Why doesn't San Fran allow massive high rise apartments like in China or Korea? Because the NIMBYs want to protect their own property values. All of these regulations are anti-market and thus promote inefficiencies.
If we accept that there is a housing problem in San Fran, the solution isn't to tightly restrict the existing supply but to increase the supply. As it is now it's like two junkies negotiating over a plastic spoon.
Cities have every reason to incentivize people to actually live there -- and yes, most successful cities need a lot more space for people to actually live in. Any gains you could accomplish here are defeated when the new living space is set aside for visitors instead of residents.
That's not strictly true -- if market participants pay attention to planned new starts, then the effect of additional supply should be seen immediately in today's prices.
My intended point was very narrow though: your default assumption should be that changes in expectations of future cashflows have an immediate impact on price, unless you can point to a particular market friction that prevents this adjustment.
Basically, you should distinguish between timing of cash flows (which don't generally matter except for discounting), and the timing of the information flowing into the market (which does).
If there were a credible plan to build more much housing and the market believed in it, it should affect the price more or less immediately. Discount rates are very low -- $1 a year from now is more or less worth $1 today.
That's not necessarily true. You assume that apartments that are used as full-time AirBnB rentals would instead be rented out to full-time tenants as "normal" apartments.
The problem is that if those apartments would be subject to rent control, a lot of landlords would prefer to keep them vacant. It's estimated that over ten thousand units in San Francisco are intentionally left vacant by their owners, because having a rent-controlled tenant in the unit makes it a lot harder to sell the property. Landlords who purchased their apartments for their appreciation value, rather than monthly cashflow, are pretty likely to do this.
If those landlords choose to leave their properties vacant, that will be a short-term reduction in the housing supply rather than an increase.
If those landlords choose sell their properties immediately, there is no telling what will happen -- some may be rented out, some may be converted into luxury apartments with smaller numbers of units, and some may be converted into single-family homes (yes, this really happens). Some may be bought by other landlords who intend to leave them vacant and flip them in a few years for a quick profit. Some may be torn down and replaced with larger buildings, which would result in a short-term decrease in supply in exchange for a long-term increase.
Of course, some landlords will rent out the apartments, which will result in a short-term increase in supply. But they won't all do that. I expect the effect on rents to be fairly small, and the effect on lawyers' bank accounts to be large.
I'm a big fan of the: if it's not registered as your primary address in tax filing documents it's treated as an investment property and is taxed as such. If no one has that address as a primary address then it's treated as investment + vacant.
Sure, keep piling on the regulations. Eventually, there will be so many regulations that no sane person will want to be a landlord or housing developer.
Or, you could solve the problem properly by building enough housing. The constraints in SF are political, not geographical.
If we loosened up restrictions a lot of them could fork out even less for smaller homes even.
The purpose of the housing market is to you know house people not provide an optimal investment vehicle or money for entrepreneurs.
Taxing inefficiency in the market that is vacant or vacation homes is the smart thing to do.
Maybe they should exhaust other avenues of solution before taking away someone else's ownership rights?
Or you could just go with, "we know better, this is how we'll dispose of other people's property." This is the attitude that cost Clinton the election.
2. The other reason we don't have a pure free market is because we want cities to be able to make themselves into the sort of city they want to be. This is fundamentally why zoning is legal and accepted: a property owner doesn't have the right to turn an office building into a residence, or a storefront into a factory, at their own discretion. San Francisco may not want to be a city of Airbnb residents and no locals. We might think they're wrong, but they get to choose that.
Note that it would be very easy to arrive at the same situation from a pure-free-market perspective: the US government, with its guns, owns all the land in the US. It delegates ownership of the land in SF to the City of SF, a corporation, under certain conditions. In turn, the City grants long-term leases to landlords under certain conditions. Tenants don't have a right to renew their short-term leases, but the City has the right to decide which landlords keep their long-term leases, and chooses to let tenants have the ability to expect their leases renewed. People freely and rationally choose to live in US land instead of land where they can actually own their property, because it's economically better for them. This is exactly what happens right now, modulo changes in terminology.
https://en.m.wikipedia.org/wiki/1906_San_Francisco_earthquak...
Capitalism doesn't require SFO to transform into Hong Kong. You can move anywhere. I live in a mid-size city where my housing costs are approximately the same as a San Francisco bathroom.
Personally, I despise the Bay Area fetishism because I'm 3000 miles away and my livlihood will be impacted significantly when an earthquake destroys hundreds of billions of property and those mortgages get vaporized.
when an earthquake destroys hundreds of billions of property and those mortgages get vaporized.
You don't allow free market to "balance itself" in industries with natural monopolies (e.g. utilities, cellular operators).
Beyond a certain distance, commuting to a city is impractical, so the space for residential development is limited (= there is a hard cap on how much stuff you can build).
The utilities are heavily regulated (for good reasons), why shouldn't the government start regulating the housing market on the same grounds?
Another thing to consider, there is nothing inherently "free market" about letting anyone build whatever they want, as long as it's on their land. Taxing, classifying and partitioning land by area covered is as arbitrary as taxing by window count[1] or house width[2]. Why not evaluate and sell vertical lots? Up from certain height, large areas are reserved for air traffic already, so there is a precedent.
It could look like this picture[3], the central beam would be regulated akin to roads today.
1 http://www.historyhouse.co.uk/articles/window_tax.html
http://www.colinsnotes.com/wp-content/uploads/2014/08/154-22...
2 https://mjwrightnz.wordpress.com/2012/10/28/amsterdams-taxin...
3 http://www.evolo.us/wp-content/uploads/2010/03/vertical-stre...
Do you have evidence to support this claim?
sorry, but that post you link to is pretty much a rant against wealth and accumulation of and anyone trying to get some apparently isn't allowed unless they share it. that kind of thinking launches no new businesses, instead its the type that results in regulations that prevent competition and innovation all under the guise of "fairness" and "for the children/environment/oppressed" etc.
We have already seen the results where governments tried to enforce fairness and equality by not rewarding competition and innovation. It wasn't pretty and it only works for so long before a generation or two passes and realizes the best days are past
You might argue that the real problem is the shortage of housing and even point to other causes but any solution to same might be years in coming if it comes at all.
In the meanwhile if its a significant negative to individual states/counties/cities I see no reason not to enforce existing or enact in fact new regulations to forbid it.
Surely those with access to significant capital can find other ways to profitably invest their money.
And I'm not sure how I feel about the fact that this would kind of limit use to young, single, healthy people. People with disabilities or medical issues, families trips with kids plus grandparents, or even just older or more introverted people that don't want the hostel vibe may want or need more privacy than a shared unit.
The other thing that gets overlooked is the flexibility AirBnB provides in the gray area between living somewhere and visiting - one can book an airbnb for a few weeks, pick up and move to a new city with no belongings, and look for a job while deciding whether to move there for longer. Or find a place to live for a short internship. People are doing this anyway via sketchy craigslist sublets, but it's a lot safer (I'm just assuming in terms of physical safety, but certainly in terms of avoiding scams) on a platform like AirBnB.
Overall, I'm disappointed that cities are not at least looking at the popularity of AirBnB and, say, creating a new kind of zoning/licensing to officially allow some small percentage of AirBnB units, or allowing some hotel zoning & construction to be added to the fun residential neighborhoods where people want to live & stay. Or encouraging more subletting type rentals (every lease I've ever been on forbids it).
If they were doing anything at all to acknowledge that AirBnB is providing something that a lot of people really want and allowing some aspects of that to flourish, I could get more behind these regulations to limit unlicensed rentals.
'cept they are more expensive than airbnb. Zoning isn't going to help, because if said zoning either implies a tax, or some other disadvantage, then it'd get reflected in the cost.
Airbnb is ecking out efficiency, at some externality cost that's not borne by the participants of the transaction. Atm, i dont know what that externality is, but society should try to figure that out, and make sure it gets paid for.
The problem isn't that units are being dedicated to AirBnB, it's that existing, everyday laws like sound restrictions aren't being enforced properly.
In this case, it's something like "if you can have more money by AirBnBing out your place on weekends, then landlords can raise your rent by approximately that amount and since people now afford it, you've got no option other than accepting the rent increase and paying for it through AirBnB".
Apparently, there are shortages of both long-term housing and temporary places to stay. Partitioning the physical buildings into one or the other class does not help match supply to demand. Of course it can help move the shortage's effect between the two kinds of use, but that's only an issue to the extent that there are shortages for both kinds of use. Really we should fix the shortages, not just try to change the identity of the people who lose out.
When we look at AirBnB specifically, there are anecdotes about its negative effect on housing supply. I have also seen some quantitative/statistical evidence about it, and that shows that it has negligible effect on housing availability. AirBnB is just far too small to have a noticeable impact on housing supply in San Francisco (and the same goes for the handful of other cities whose stats I've seen). So even if you don't buy the theoretical argument about the effect of fragmenting resources on efficient allocation, from a practical point of view it quickly becomes obvious that AirBnB bans are not worthy of serious consideration as a solution to housing shortages.
So the most persuasive motivation for AirBnB bans are the arguments about noise, building security, and so forth. I don't personally find these arguments persuasive either but at least they are debatable.
[1] http://harvardlpr.com/wp-content/uploads/2016/02/10.1_10_Lee... [2] https://www.theguardian.com/us-news/2016/jun/27/airbnb-new-y...
Your [2] claims that 8000 units = 10% of the housing supply in NYC. I find this claim incredible.
Your [1] claims that more than 12% of housing units in the LA neighborhood of Venice Beach are airbnbs. Given that the average American gets 16 days of vacation per year [http://theweek.com/articles/463897/americas-war-vacation-by-...] I suppose we should expect about 5% of bedrooms to be allocated to short-term use. AirBnB's market share is less than 100% of those 5%. On the other hand, LA is relatively popular as a tourist destination so we should expect more airbnbs than Topeka KS. So that claim seems plausible to me. This report goes on to project from a model that these Venice Beach airbnbs, if returned to the long-term rental market, would lower prices by $67/month from $2680, a reduction of 2.5%. The same author notes that in recent years, prices rental prices have increased by 7.3% per year. It appears that the "solution" of banning AirBnB amounts to turning back the clock on the problem by just a few months.
This would alleviate the problem of hotels claiming hosts are a hotel. And it would make AirBnb better as the worst hosts are the ones that are managing multiple units.
Having large multi-unit hosts expands the inventory. But the whole point of using AirBnb is that you dont want to stay at a hotel.
There is a critical point where, if AirBnb allows total number of multi-unit hosts to pass, I suspect the whole thing will crumble. No one wants to wade through that mess to find the thing that AirBnb became so popular for-- normal individuals connecting to strike a deal.
https://www.airbnbaction.com/one-host-one-home-san-francisco... https://www.airbnbaction.com/one-host-one-home-new-york-city...
I believe short term accommodations affordability is just as important as long-term accommodations affordability.
Valuing one over the other is the common fallacy of assuming our own subjective valuation is more accurate than the market's.
Regulatory prohibitions are harmful in two additional ways:
* they fundemantally violate our human rights. Any voluntary interaction between consenting adults should be legal, particularly on their own private property. One can have their friend stay over, every day of the year, but as soon money (God forbid!) changes hands, it becomes illegal and punishable with income expropriation (fines)? The absurdity of the law is an indication of its injustice.
* they have collateral damage. For example an Airbnb licensing scheme will often make the difference between a person renting out their unit while they go on vacation for three weeks, and a person not bothering, even if the licensing scheme does not prohibit this. Complying with regulations is an extra cost, and it's a fixed cost that disproportionately affects the long tail of the most casual/occasional users. Regulatory prohibitions like this are one of the biggest drivers of the professionalization of the economy, which disempowers people in lower income groups.
I expect either this will be overturned on appeal, or it will provide a path for media companies to bend ISPs and others to their will, as they've tried to for years
[1] "It creates no obligation on plaintiffs' part to monitor, edit, withdraw or block the content supplied by hosts"
Private companies creating a list of banned persons is different, substantially, from ordinances requiring a license.
The very basis of negative versus positive approval, for instance.
The ordinance only requires AirBNB not charge service fees are people who are unlicensed.
Imagine, instead, LA requires licensing of people who download torrents (much like they are allowed to require that people register illegal weapons, etc, and then charge folks for it). Then they say "ISP's can do whatever they want, but they can't charge subscriber fees to people who download torrents who have not registered. Doing so is a misdemeanor".
Like I said, you can literally change the words "hosts who have not registered to rent their home" to "people who have not registered to do X", where X is pretty much whatever you want.
(For the curious, here's what you have to do: http://sf-planning.org/office-short-term-rental-registry-faq...)
The actual ordinance text:
(e) Criminal Penalties. Any Owner or Business Entity who rents a Residential Unit for Tourist or Transient Use in violation of this Chapter 41 A, or any Hosting Platform that provides a Booking Service for a Residential Unit to be used for Tourist or Transient Use in violation of the Hosting Platform's obligations under this Chapter 41A, shall be guilty of a misdemeanor. Any person convicted of a misdemeanor hereunder shall be punishable by a fine of not more than $1,000 or by imprisonment in the County Jail for a period of not more than six months, or by both. Each Residential Unit rented for Tourist or Transient Use shall constitute a separate offense.
Imagine, instead, LA requires licensing of people who download torrents
You can literally change the words *"hosts who have not registered to rent their home"* to *"people who have not registered to do X"*
Requiring a license for renting out a property for tourist or transient use is very different to requiring a license for torrenting. Could LA pass a law requiring a license for torrenting? Could such a law withstand appeal?
Is there anything preventing, say, media companies putting together lists of people they claim violate the law, giving that to a state or local government, and having the state or local government require that camcorder sellers not sell them camcorders? (Section 230 does not apply because there is neither internet nor communication, so they can be banned outright.) What could a camcorder seller do to object to this law?
No, if we need a comparison, it is much more akin to requiring those hiring truck drivers to check if they have a commercial driver's license.
In fact, it's quite the opposite. The ruling is broad enough to be applicable to pretty much anything.
Does anybody have a link handy?
https://www.cand.uscourts.gov/filelibrary/2875/Order_re_Prel...
Here is the ordinance in question, making it a misdemeanor to provide a booking service for them: http://sfbos.org/sites/default/files/o0178-16.pdf
Section 230 of the CDA doesn't say "ISPs don't have to monitor their subscribers"; it says "content providers aren't liable for their subscribers' content, as long as the provider's actions are limited purely to publication of content" which happens to have the effect of making it so that in many situations, providers don't have an obligation to monitor their subscribers or exercise editorial control to cover their bases.
In this case, the court opinion is quite clear that it's OK for AirBNB to publish information about unregistered listings, even if they get paid to do so. The problem is when they actively participate in transactions that go beyond simple publication of information. That seems in line with what the law actually says, and I don't see how it would apply to an ISP that is merely conveying information back and forth between third parties.
This is a correct interpretation of the Safe Harbor laws. If Airbnb was a message board and people just happened to arrange short-term rentals through it they would be fine. An ISP fits this as well because they are not actively invested to what is happening on their networks, only maintaining the networks. Likewise what their users contribute is irrelevant to the rejection.
There is just no way you can argue away the fact that Airbnb is not a direct contributor to the market. They collect fees directly related to the service provided of providing short-term rentals classed as 'Booking Service' in the letter of the law of the pdf.
The logic is very simple: if you are thing classified as a booking service then you need to follow these regulations. An ISP cannot be classed as a booking service under the letter of the law.
obligatory IANAL.
Thumbtack checks plumbers and electricians are properly licensed before listing.
To be picky, it is about whether AirBNB can take a percentage out of the revenue that people renting illegally their own house/units in SF by publishing the offer on Airbnb are trying to make. The actual "provider" is the home owner, airbnb is just the "agent". Basically some SF owners fail to comply with local Law, but airbnb is not exactly free like - say - CraigList, they take a percentage on the deals, and as such they are co-responsible.
It's like laws against prostitution or marijuana -- pointless nanny-stating. Private property rights ought to mean something.
Should someone be allowed to turn their home into a restaurant? A gas station? A concert venue? Should someone be allowed to turn a vacant residential lot into a landfill?
When you buy a home, some of the due diligence you do is to review local zoning. For example, the value of the home might be partially due to it being on a quiet street with ample parking. If your neighbor turns their home into a 24-hour pharmacy, that decision has a huge impact on you.
Zoning laws seem a reasonable way to balance long-term stability and predictability with the free market. If someone prefers the energy and convenience of a mixed commercial/residential zone, cool. If someone else prefers the peace and community of a residential-only neighborhood, that should be an option too.
Operating a B&B out of your private home is not the same as opening a gas station, but it is a commercial enterprise with some of the negative effects.
If you are looking to restrict the rights of property owners, the free market way to it is with a HOA - an agreement owners living within the neighborhood voluntarily enter into.
Also, don't knock mixed-use zoning. I wish I had a few coffee shops in my suburb.
What? An HOA is created by developers at the time of development not retroactively applied on a neighborhood.
Regardless of that if an HOA was voluntary then it has no teeth when parcels are bought and sold. If the HOA passes along with the deed then you've just created a small neighborhood zoning board which is indistinguishable from a small town government and it's not a free market.
Also, Private Property rights would be a regulation on the "free market".