
Airbnb And The Unstoppable Rise Of The Share Economy - afkovacs
http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-the-unstoppable-rise-of-the-share-economy/
======
nugget
Airbnb is partly responsible for the massive spike in rental prices around San
Francisco. I know a lot of people who rented more apartment than they could
really afford because they know they can earn extra income via airbnb.

In the short term, this seems like (and may indeed be) a positive trend -
people are able to squeeze into better quality apartments than they otherwise
could have. But in the medium term, as we now see in SF, market prices simply
rise to account for this "new normal" behavior. Unintended consequences
follow. First, someone who is not willing to open their apartment to part-time
airbnb'rs is now at a disadvantage. Second, at least part, and perhaps most
of, the extra airbnb income is now passed on to the landlords in the form of
higher rental prices.

Remember it doesn't matter how much money you have, it only matters how much
money you have relative to other people who want the same things you do.

~~~
marcojgm
There is no correlation between the rise in rental prices in SF and Airbnb.
It's absurd to think that they could impact that at this point. A large chunk
of the hosts on the site rent out a room in their own homes. If you want
someone to blame for the raising prices, I think it's more rational to point
the finger at the spate of IPOs and the newly minted folks who are in the
buying market at the moment. Or if that's not your cup of tea, then perhaps
blame the size of the city (as it can't get any bigger) or even more
appropriately, blame the blood hungry landlords who still insist you pay by
check and raise their rates by at least 30% every time one of their properties
free up.

Either way, just wildly saying that without any substantial evidence is pretty
weak.

~~~
meej
It is affecting housing stock, though. The Tenant's Union says they've
discovered thousands of apartments and some whole buildings have been taken
off the rental market to be used by tourists.

~~~
eru
But that's good. That's arbitrage between rental and hospitality markets.

------
doctorpangloss
While I think most on this site would applaud efficiently allocating anything,
there are some drawbacks to efficiently allocating things strictly for money.

Michael Sandel, author of _What Money Can't Buy_ , argues pretty eloquently
the economic and social cost-benefit to pricing things like a placement in
line, or a spare room in a house.

To extend one of his examples, Airbnb gives you a hard-cash price for your
extra room—or even your couch. One of your friends wants to couch surf for a
week.

By past social convention, you'd give it to him for free. He saves money he'd
spend on something else.

By Airbnb convention, you charge him for it. You kind of have to, because
everyone else is, and you can't leave money on the table. You have cash now,
but a bit less than he would have, because Airbnb takes a cut.

Sandel was interested in investigating this society where the rich get the
best of everything first, explicitly at the expense of the poor.

So I hope there are some comments investigating whether or not we're better
off socially, not necessarily economically, by renting our "excess capacity"
or being generous with our "excess capacity."

~~~
angersock
I think you may be missing the part where, by drawing in revenue, you help
offset the risk of letting random people make use of your capital.

While I agree that perhaps in a better world everyone should simply share
resources unencumbered by profit motive, the assignment of a usage fee to a
couch or something does help prevent overuse of resources.

In the case of a friend sleeping on my couch, there is our personal
relationship and desire not to cause future trouble that helps limit the
possible risk of the couch getting destroyed--having a pecuniary barrier to
entry for a stranger to use my couch seems reasonable.

~~~
hosh
What is abuse? Abuse is about fairness. Fairness is not about money, though we
have tried for a long time to mediate pain and suffering through money. Abuse
and fairness are emotional. It is _not_ rational. Putting a monetary value to
this is rational _izing_ what is fundamentally not rational.

Just because it is not rational does not make it any less real. You don't
negotiate with a hurricane. If you are weighing the pros and cons about
renting stuff out to a friend, then there are some deeper issues involved. Is
this particular friend widely known for mooching off of you? (Why is such a
person your friend anyways?) Generally, if you fear abuse of your assets and
personal space/time, then you also have some Jungian shadows related to
abusing your friendships.

Renting something out to strangers and taking money to mitigate risk -- that
seems fair to me. (But risk is _emotionally_ related to the same kinds of
issues related to renting or not renting out to a friend, or a friend abusing
or not abusing your generosity).

There are ways to deal with the underlying non-rationalizable emotions that
does not involve money. Hopefully, those methods will become more popular
going forward.

It's interesting. I have never considered this before. Conducting transactions
like this means stripping away the impersonal nature of corporations
(<http://onthespiral.com/unifying-value-universe>), makes you much more aware
of human nature, maybe gets people to start dealing with it.

Consider also <http://playspent.org> ... It turns out: a social net is very
advantageous. ([http://www.amazon.com/Dont-Need-Rise-Network-
ebook/dp/B009K8...](http://www.amazon.com/Dont-Need-Rise-Network-
ebook/dp/B009K8R7OA))

------
fleitz
Sounds like it's classic capitalism as outlined by Adam Smith.

Smith didn't envision massive corporations making money by having the
government pass favorable legislation, he envisioned many small players making
a decent living through competition rather than rent seeking.

~~~
fennecfoxen
The free market, remember, is only efficient under certain circumstances,
particularly: transaction costs must be low and there must be few barriers to
entry.

AirBnB _et cetera_ lower the transaction costs and remove barriers to entry.

~~~
oillio
Easy discovery of price information is also important to capitalistic markets.
Of course, AirBnB helps there as well.

------
geebee
I agree that the rise of the share economy is unstoppable, but I don't at all
agree that this will or should be a free-for-all with no regulation. We just
need to catch up socially and legally with technology.

To me, the biggest problem with the rise of AirBnB is in areas that have
tourist appeal but are mainly populated with long term residents. People used
to occasionally rent out their place, or just let people stay there for free,
but there was almost always some kind of social connection.

The removal of friction has allowed this to become far more widespread. I
personally believe that it most definitely has the capacity for harm.

I remember hearing about one incident recently in the california wine country
where there are some fruit trees on a public easement. Mostly residential, but
lots of appeal to tourists. The neighbors shared the trees as a commons,
they'd take a bit, but leave plenty, and would informally contribute time and
money to maintenance. One day, the trees were stripped, completely, of any
fruit. It turned out that a couple of people renting a nearby house had
stripped the trees. The house, which had formerly been occupied by a family
with kids, was now a full time vacation rental (at great profit for the owner)
and was advertising "fruit picking in the alleyway" as one of the wonderful
activities available to short term renters.

I know I risk sounding very trivial here, elevating little neighborhood
squabbles about crab apples all out of proportion, but I think the story I
heard really gets at the problem. Long term residents, to use a vulgar
expression, have to sleep where they shit. Short termers don't. The non-legal
self-corrective mechanisms that used to provide social harmony, things we
weren't even aware of, may be badly disrupted but a very large number of short
term residents. We're all willing to (or should be willing to) tolerate the
occasional loud backyard party next door. But would we want to have that go on
every night, all summer, from vacationers looking to maximize their fun? All
of a sudden, we're using the law to regulate something that used to be managed
less formally. The law is a terrible tool, way worse than just talking to your
neighbors, but when you have a new neighbor every three days,it may be all
you've got.

And even when the short term vacationers are on their best behavior, there is
still a loss. There is also absolutely a loss when families who would like to
know and socialize with long term neighbors, especially with children, start
to get pushed out because they can't compete on price with people who plan to
airbnb the crap out the old neighborhood. I don't have a link to this, but I
read once that an economist estimated that good relations with the neighbors
were worth about $50,000.

I remember PG writing about how new forms of property come into existence with
new technologies, just as old ones can go away. We may only become aware that
there was this vaguely defined property we owned now that airbnb has found a
way to cash in. I really do think that the owner of many of these VRBOs are
selling the neighborhood rather than the house itself, and they're harming the
neighborhood in the process.

I'm more than ok with some use of airbnb, and obviously it opens up new
benefits as well. But I think it is very reasonable for communities to
strongly resist widespread short term rentals in their neighborhoods.

~~~
temphn
The United States government is currently responsible for funding people to
move into previously peaceful communities and jack up the murder rate, with
zero prior review of their propensity to commit violence.

[http://www.theatlantic.com/magazine/archive/2008/07/american...](http://www.theatlantic.com/magazine/archive/2008/07/american-
murder-mystery/306872/)

    
    
      American Murder Mystery
    
      Why is crime rising in so many American cities? The answer 
      implicates one of the most celebrated antipoverty programs 
      of recent decades.
    
      ...
    
      About six months ago, they decided to put a hunch to the 
      test. Janikowski merged his computer map of crime patterns 
      with Betts’s map of Section 8 rentals. Where Janikowski saw 
      a bunny rabbit, Betts saw a sideways horseshoe (“He has a 
      better imagination,” she said). Otherwise, the match was 
      near-perfect. On the merged map, dense violent-crime areas 
      are shaded dark blue, and Section 8 addresses are 
      represented by little red dots. All of the dark-blue areas 
      are covered in little red dots, like bursts of gunfire. The 
      rest of the city has almost no dots.
    
      Betts remembers her discomfort as she looked at the map.      
      The couple had been musing about the connection for months, 
      but they were amazed—and deflated—to see how perfectly the 
      two data sets fit together. She knew right away that this 
      would be a “hard thing to say or write.” Nobody in the 
      antipoverty community and nobody in city leadership was 
      going to welcome the news that the noble experiment that 
      they’d been engaged in for the past decade had been 
      bringing the city down, in ways they’d never expected. But 
      the connection was too obvious to ignore, and Betts and 
      Janikowski figured that the same thing must be happening 
      all around the country.
    

That's the US Government "helping". Why would anyone trust them to intercede
in a dispute between neighbors?

~~~
rayiner
First, crime has been falling in American cities almost monotonically since
the 1980's, aside from a slight uptick in the last several years as a result
of the recession.

Second, nobody thinks that Section 8 doesn't increase crime in nicer
neighborhoods. The rationale is that spreading out the poor families via
Section 8 reduces overall crime in the city versus concentrating them into the
projects.

I used to live in one of the most expensive neighborhoods in Chicago, and many
of the surrounding high-rises took Section 8 residents. While I'm sure they
raised property crime slightly in the area, I think most people preferred that
state of affairs to having the Cabrini-Green projects next door.

~~~
temphn

      they raised property crime slightly
    

The article shows that they increased the murder rate substantially. Moreover,
most people would prefer to have 10 murderers focusing their attentions on
each other than having them next door. A spatially localized Cabrini Green
which you can avoid is far superior to one that you cannot, especially when it
is your tax dollars that are being used against your will to create this
dangerous situation. By contrast, AirBnB is not forcing you to pay the rent
for the hipsters boarded in your neighbor's domicile.

    
    
      nobody thinks that Section 8 doesn't increase crime in 
      nicer neighborhoods
    

OK. So we agree that official United States government policy increased crime
in nicer neighborhoods and that nobody thinks differently. And we probably
agree that murders are considerably more serious than any of the hypothetical
harms caused by apartment rentals, especially given the statistical evidence
for a direct causal effect of government policy presented in the article.

So: given that it is still official US government policy to increase the
_murder rate_ in middle class neighborhoods (Section 8's budget was raised to
$19B in 2011), exactly why should anyone believe other government housing
regulations would promote the common welfare?

~~~
rayiner
The article doesn't show shit. It completely ignores the fact that murders in
large cities hit record lows right before the recession, even though such
cities are the heaviest users of Section 8.

As for mid-size cities? Look at the cities on that list and see what happened
to their Hispanic immigrant profile over the last two decades. The article
makes no attempt to factor out that phenomenon.

Section 8 is a solution to a problem that has no good solution. Segregation is
worse--it destroys economic development in the ghettos and its not like those
people can't go up to the nice neighborhoods. Moreover, it's not like people
who live in Chicago want to take the suburb route and move to the suburbs,
separated by distance so the poor minorities can't reach them.

------
utnick
Is it sharing if you are getting payed for it? Isn't that normal commerce?

Sharing economy to me means sites like freecycle, couchsurfing, and your
neighborhood listserv .

------
tehstone
All the discussion here seems to revolve around AirBnb in particular and
neglect all of the other sharing services mentioned in the article.

My first thoughts on this relate to those other services. In particular, car
and equipment sharing. Sure it's a great idea to rent out stuff you're not
currently using, but if everyone starts to rely on the availability of
whatever they need, whenever they need it, what is the incentive to actually
buy anything for yourself? Further down the road, when an increasingly large
portion of the population just assumes they can borrow/rent whatever they need
and have decided to never buy anything for themselves, there will eventually
be a shortage in goods to be borrowed/rented. So to me, this seems like a
market with a very low cap on growth. Namely, when that threshold of borrowers
vs owners is reached.

~~~
cerebrum
When that threshold is reached people will start buying stuff again,
increasing said threshold. Eventually the system will converge to a stable
point, or it will continually adapt due to changing economics/demographics.

Isn't it beautiful how markets can self-regulate?

