"...If you take AirBNB to its logical conclusion, you end up with landlords renting apartments on AirBNB instead of to actual residents, because they can make more that way..."
This is exactly what happens in Paris. Housing market there is skewed due to exactly this behavior. People buy apartments and sit on them to rent them out short term. Over time it created a situation where people who I would classify as "working poor", were without housing. It struck me as strange when I was in college to see SDF who have to go to work.
> This is exactly what happens in Paris. Housing market there is skewed due to exactly this behavior.
Under any sane market, untapped demand creates its own supply.
Big cities, though, have big governments that forbid new construction. This works very well for those who already own property (they have their rental prices driven up), and works very well for the politicians (who get donations from the existing property owners) but works poorly for everyone else.
Not everyone who owns property is a landlord, so that alone blows a giant hole in your thesis. The older a city is, the more people want it to stay the same because they bought their property based on a certain set of assumptions, like a place being a quiet neighborhood or so.
Property owners do have an interest in the use and enjoyment of their property, and it is they, rather than government itself, that tend to raise a fuss when new construction is proposed. After all, local government makes quite a lot of money from new construction - permit fees, increased spending by construction workers, increased tax revenue on the newly developed property, and so forth. Likewise, politicians get donations from developers, and often larger ones than from residents since developers have deeper pockets. On the other hand, developers only have one vote each and tend to be outnumbered by residents, whose interests often prevail for this reason.
If you own your own home, you would probably not be thrilled if the lot next door was suddenly the site of a ten-story apartment building without you being consulted or compensated. If you don't like it, it's not like you can just move, and selling your property might involve a rather steep loss, depending on the quality and configuration of the new development. If you rent, it's easy to be indifferent to those considerations because you don't have any assets at risk.
People who aren't comfortable with the uncertainties of homeownership are free to rent instead. There are plenty of other investment opportunities out there. It isn't self-evident that keeping neighborhoods static creates more value than it destroys. I think there's more evidence to the contrary.
It's not a binary choice between runaway Shanghai-style development and amber-like stasis. You can equally argue that if people don't have any input into the planning process then they won't invest that property market in the first place. If there aren't enough people willing to buy, then developers won't be willing to build. This is why developers create HOA corporations for apartment buildings and tract housing, and make membership a condition of sale: to assure buyers that the development will be maintained in similar style to the time the properties were offered to the market. They don't emerge naturally from some common democratic impulse of apartment-dwellers or suburbanites.
Also, home ownership is not an investment opportunity for most people, who are looking for a place to live long-term rather than to flip or extract cash value from (the departure from this historical approach has a lot to do with the recent financial crisis). Rather, most homeowners want to extract use value and simply maintain the asset price.
Quiet you. Everyone knows that people are strictly rational economic actors. Factors such as sentimentality, preference, and anything else not about screwing over the next guy as much as possible never come into play.
I'm pretty sure the construction contractors have some skin in the "donating"-to-local-politicians game as well. Its not just one side that gets to hire lobbyists.
This is exactly what happens in Paris. Housing market there is skewed due to exactly this behavior. People buy apartments and sit on them to rent them out short term. Over time it created a situation where people who I would classify as "working poor", were without housing. It struck me as strange when I was in college to see SDF who have to go to work.