Barcelona buys apartment building at center of eviction protests

> What has happened is Airbnb which has made it viable to take a significant portion of the housing stock off the regular market.

Suppose this is true. Then you replace that portion of the housing stock with new construction, and what problem is there? The problem is only if you're constrained from doing that.

> The other thing is that rents going up dramatically is a global phenomenon

There have been two major recent drivers of housing demand. One, the interest rates that until COVID were near-zero (which is a global phenomenon because capital markets are global). Two, since COVID, work from home causing people to move around and shift where the demand is. Also a global phenomenon.

Both of these can drive short-term increases in rents on the order of a few years, but they should also drive new construction, and then once the construction has caught up to the demand the rents would go back down.

Unless the construction isn't allowed to happen.

> The argument that high rents are mainly due to large regulations and lack of building is largely not supported by the evidence.

It very much is. You can take any two cities and account for things like median income and population density and when you're done you'll consistently find that the one with more restrictive zoning has higher rent.

Short term rentals fulfil important function. There is real demand for it. The problem is that it's expensive or just impossible to build anything and that it's very cheap to own.

The solution is known: significant land value tax and looser regulations to actually use the land. This will not happen though because of lobbying of property and land owners who enjoy their rent seeking. They will always manage to find another scape goat. One day it's flippers, next day it's Airbnb. Anything but land owners being forced to pay taxes to fund the area they own land on.

> But if you look at many cities you'll see that population has not grown significantly.

You've got cause and effect backwards here. The population hasn't grown because the housing hasn't been built for them. The city population would have grown if more housing were available, but instead what happened is that the limited supply drive rents up and kept some people out.

Separately, there's also too few hotels in the city to accommodate tourists, so some housing was converted to that more profitable use. It all can be traced back to not building enough to satisfy increasing demand.

Looking at raw population numbers is misleading.

Average household size has declined due to changing social dynamics (longer times before marriage, fewer kids, etc.) so even if population is static you need more units. Spain went from 3 in 1990 to 2.5, which is a pretty drastic change.

Correct. A phenomenon that IS global is the financialization or property (of which AirBNB is an aspect). Could it be as simple as, "Housing is now an investment, rent goes up because investors want returns, the solution is to limit or prohibit using housing as an investment"?

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I recommend you looking into this new tech called steel. It allows you to build vertically extremely tall buildings.

If those buildings are “useless”, how is the developer going to make money on it? That doesn’t pass a basic smell test.

Your example about China is pretty bad. They moved most of their population into cities over the past 50 years by massively building housing and making it affordable to their middle class.

Young people struggling to afford their own place in a tier 1 city in China is not evidence of it failing, it’s evidence of tenants being picky.

China’s housing has also had several bust cycles where the prices came down. Government intervention and bailouts prevented it from being as obvious, but supply and demand most certainly work.

The catch here is that the people who first get to buy that property usually already have tons of money and just use it as an investment, either to resell, rent it out, or use it for AirBnB & such. Solving that problem isn't very straightforward.

Where I live, for example, the government has been debating taxing non-first properties up to 50% (the yearly real-estate tax). The idea of the proponents is to make it so unaffordable to own more than one property that people would stop buying it as an investment or sell off existing ones. But the issue is that the people who already own that estate (or have the money for more) would still be better off by just raising the rent to cover the increased tax instead of selling it. So it once again fails those who end up paying the rent.

The only real solution seems to be government-funded developments with restrictions put in place on who can buy them, rent them out, etc. But to do that the government has to afford it somehow. They also need to put size minimums in place, otherwise we end up with the same just studios situation, which seems to be a thing with a lot of public-funded developments (perhaps because then the politicians can claim they "built X flats"?).

Yeah, the USA (in general) won’t do anything at all.

A few medium-sized cities like Austin are the exception to this.

Go vertical?

'Your' property exists as a line item on a ledger legitimized by violence of the state. In exchange for receiving electricity and water and transport and police support for securing it, you have to follow a few rules.

Well, what if we flip it around: What gives you the right to own a bunch of extra AirBnB properties in the first place? It's just a set of assumptions that we've been living under for a while and that we can change if the society overall wants to. Some feudal lord 500 years ago might have said "What gives you peasants the right to own any land at all, or question my judgment on any matter?" There's nothing magical about the particular conception of property rights we're currently immersed in.

What gives you the right to remove squatters from locations you believe are your property?

Laws are just rules that people happen to like. I know we consider the right to property to be fundamental, but the right to have somewhere to sleep is also pretty fundamental.

>gives you the right to make up rules on what I can do with my property?

What gives you the right to make up rules about what everyone else can do with a particular place on their world?

Well, I have a modest proposal...

In specific areas demand is reduced via higher prices. Market 101. Hence why rent controls do the opposite...

Now, in Europe the growing demand overall is due to immigration, which is a matter of policy and thus can also easily be reduced/regulated.

You might be simply struggling with some cognitive hurdle here, I don't know what it is, and it's hard for me to help you.

Maybe try to research the city of Barcelona, the available space for construction, the process of developing high-rise buildings, and then try to ask yourself what steps need to be taken to build 100k new flats in the city?

Consider the infrastructure, the cost, the timeframe, steps needed to ensure quality, and make sure that it doesn't become unliveable like american downtowns...

Then you could maybe think about what happens when rent prices drop, and whether a decrease in apartment prices that follow would have some effect on the number of mortgage defaults.

Maybe consider the political support you'd need for such a development and how you'd get it from the existing residents?

Finally try to do some napkin math and figure out how quickly these new units would be bought up as vacation houses by the rest of Europe and the rest of Spain moving from smaller towns to the newly available stock in the city. For bonus points you could try to estimate how much new housing was built in Barcelona in the last 20 years.

Maybe that'll help. I'm really not sure what you mean by "identification strategies", but thanks for all your research about just letting developers build denser housing. I'm sure if they just listened to your simple advice, the problem would have been solved long ago. NYC and SF are known for their affordable and high quality rentals.

Interesting, please explain China.

Seriously, all of the cities are massively overbuilt. More so the smaller ones, but even Shanghai, Beijing, Shenzhen, Chongqing. AirBnB is not allowed. Huge numbers of units sit never used and off market. BTW that's with a SHRINKING population. Overbuild estimate is 50M units (150M people) with some 20M units unfinished. Prices are insane and comparable to NYC/London @ $10k/m2, when incomes are only 30% as high.

Why? Financialization. Yes, property values ONLY started falling WHEN builders stopped completing buildings. They were not places to live, they were investment vehicles. This is just as true in London, Vancouver, NYC, SF, Miami, etc.

Here are more articles about housing, supply and demand:

https://bendyimby.com/2024/01/01/housing-supply-and-demand/

The highest demand for housing is in central locations where there’s barely any space left for construction. In Europe, cities were beginning to form around these nuclei often more than a thousand years ago.

There are other factors to consider like transportation and traffic, the quality of life of the inhabitants, business, tourism, future growth, climate resilience and so forth.

This isn’t a let’s cut down a bunch of trees and build a house out of low quality lumber in a week kinda situation.

You only induce more traffic where there was already demand for it, or potential demand.

Build a fifty lane wide highway in the wilds of Montana and it will carry about as many cars as the current freeway.

Do those places need high levels of immigration?

> I don't think it applies to housing.

It does. Evidence: no large city in the US, Japan, or the Western Europe managed to lower housing prices long-term by increasing density.

Prices only go down if the city population goes down or stops growing.

> Changes in the situation move the curves around.

Aye, there's the rub. Changes in the situation do NOT move the gravity curves around in any scenario where Newtonian physics is a reasonable model to be using. So whatever kind of "law" this "law of supply and demand" actually is, it clearly is not like the laws of physics.

> You are disregarding supply and demand because it's not a 100% bullet-proof model

I didn't any suggestion to "disregard" the "law of supply and demand". I saw a suggestion that whatever kind of "law" this is, it is a very different kind of thing than a law of physics, to which a comparison was being made.

> Any model that tries to predict human behaviour will be imperfect, we all know that.

Yet we can rarely even bound the actual scale of the imperfection, so discussing "laws" of economics as if they are in some way similar to the law of gravity seems a little silly.

> You are disregarding supply and demand because it's not a 100% bullet-proof model

OK. Can you provide me just one example of a large city that reduced the housing sale prices by building more dense units? Not by crashing its economy or otherwise decreasing the population.

If your model is correct, there should be at least _some_ examples.

> There is evidence that building more reduces prices.

There is none. Your studies are basically nonsense. Here's the strongest result:

> One study cited in her report found that the average new apartment building lowers nearby rents by 5 percent to 7 percent “relative to the trend rent growth otherwise would have followed”

Translation: the prices grew, but we managed to P-hack a small subset of data that shows at least _some_ effect. They could not find actual _decreases_ and had to resort to "would have beens".

There's an overview article (that also contains the links to the study mentioned in your link): https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf - feel free to look for the evidence for the failure of the "just build more".

A law of supply and demand that applies only to something with inelastic demand (and housing is not a perfect example of such a thing) is very different than some universal law of economics, and even more different than any law of physics.

In this form, the law can’t be used to draw relevant conclusions about urban planning. It’s also demonstrably false, as the demand and supply never perfectly match.

More than 3 moves if the 0%-100% control range is a very narrow sub-range of the input range. i.e. 90% of the handle movement doesn't do anything at all.

This is actually surprisingly common, often the full range of hot to cold happens between 5-15% of actuation or 85-95% of actuation.

Someone made a bunch of money a few years ago selling singing pickles. Doubt there was a sudden human need for singing pickles. Someone created that demand.

"There is no X in Y" is not a proof that "There is no X".

The MIT Press had a book in the 90s called "Philosophies of Manufacture" that gathered together writings, pamphlets, letters and more that flowed around as the industrial revolution ramped up in the USA. It is filled with the actual industrialists and/or capitalists fretting about how there would not be enough demand for their products, and openly formulating plans to increase demand via new means (which today we would call advertising and marketing). This is not some idea flowing from progressive politics, it originates with the capital class itself.

How hard is it for a person from a random village in Austria to move to Vienna?

Is it possible to get that affordable rent within, say, a year? My understanding is the wait list for this affordable housing can stretch multiple years.

Maybe Vienna is affordable to people living there, but at the cost of extreme difficulty for outsiders (even Austrian outsiders) to move there.

So, if you grew up in a poor village with little economic opportunity, you will have a lot of difficulty moving to Vienna to open up your job prospects. The affordable housing there comes at the cost of denying outsiders an opportunity to better their position in life.

Is that better than riding rents displacing longer term residents? Maybe, I don't know, but there are invisible victims to many affordable housing schemes.

€480 was in December 2012 when we left (I remember the date because we flew out Christmas eve ‘12). It was cheaper in 2005.

The 2013 Vienna Philharmonic New Year's Concert?

Yeah that would be a factor but there's more to that. For example the Japanese are so crafty with land use they even allow an odd type of development called Zakkyo. Which are multi-storey buildings wherein each floor is owned and managed independently. The foot traffic isn't restricted to the ground floor to enjoy these "third places".

IMO geographical constraints should not be the all-in justification for a certain land-use/housing policy. I hear a lot chalk up the fact Barcelona stopped building since the 1980s because they're surrounded by mountains and the sea. Or recently with the LA fires people look at these wrong answers. There's no reason for things being like that other than NIMBYism and lack of long-term political will from local councils.

It’s actually worth stepping back a bit because everyone has a cause and everyone has a solution.

Short term lets, landlords, corporate investors, foreign investors, property speculators, immigrants… are all soaking up the supply of housing and pricing locals out of an area! Fix it by banning the lot of it!

The other argument is always that none of that really matters, just build more houses okay? Millions of ‘em. Deregulate, reform planning, do whatever it takes.

Looking at the bigger picture you’d want to tackle both the demand and supply side. Housing is for living in, not investment, so disincentivise foreign investment, corporate landlords, buy to let, etc. and basically make it less attractive than other forms of investment.

This would help in a city like Barcelona because housing density is already high and frees up existing supply that can be occupied by locals once more. You might find a place in Poble Nou or Gracia again instead of having to trek out past Sant Cugat.

Similarly, houses need to be built and in many cases NIMBYism or planning regulation gets in the way of that. But another challenge is building the workforce to build not just the homes but the town infrastructure around them, as well as the incentives for businesses to do that as you say.

If you don’t tackle the issue on both the demand and supply side at the same time then I feel like you just end up where we are now, where lots of houses and flats are built but either unaffordable or snapped up by the wealth class as an asset.

We fixate on the easiest things to fixate on, and it becomes an easily attacked effigy for the real problem.

When I lived in Mexico City, my friends would complain about gringos causing an increase in rents when the places they wanted to live for cheap were populated almost entirely by every Mexican who makes more money than they do.

Yet there was this implication that if you could somehow shut down gringo tourism, there would be no competition for living in the nice apartments in the nice neighborhoods. They would be desperate for your 2000 pesos or something.

>The durable solution is to increase housing starts by deregulation and financial incentives or public housing.

I think that there is a negligence of the economic conditions that face the construction industry in this and most similar arguments. Construction tends to be a pain point for costs, yet it is almost universally seen as a bad career. How can we reconcile this?

It's a boom-and-bust industry. Some years there is more work than people can handle, others they are struggling to get paid. Part of the solution should be to try to level out the cycles by building public housing when there is a downturn, and pulling back when there is not.

However, this is basically opposite of the cycle of populist demand for public housing, which tends to spike when prices are high and taper off when they go down. I don't have the deep knowledge of economics to make this argument robust, but what I think I'm aiming at is a sort of Keynesian approach to construction policy.

Regarding tourism, I think airbnb encourages mainly poorer tourists, who just eat food, drink mostly water and take pictures.

If you want $$$ from tourism, you have to find ways to attract the rich.

D'oh!

The rich don't necessarily like their destinations touristy. They don't like to elbow their ways through crowds, stand in lineups, or have stranger "extras" in their pictures.

Airbnb contributes to "touristy".

I hate seeing my taxes wasted on roads maintenance, airports and medical facilities for the ones that didn’t bother having a physical activity or eating healthy during they life (the list can go very long). Don’t take me wrong, I’m happy to have roads and hospitals but not at that scale. I pay vastly more for those than what I benefit from.

On the other hand I’m very happy to freely use the new cycling roads and benefit from a somewhat stable and secure society where the chances are low to encounter a furious outcast that want to rob me.

Municipal politics often resembles a Reality TV wheel-squeaking contest. He worked to get on the show, played, and won a modest prize.

Was it worth all his time & hassle? I'll guess "no", but I don't follow Spanish politics.

Meanwhile, a wide variety of Spanish lotteries offer you chances to win vastly larger prizes, at taxpayer expense, with a quick & easy ticket purchase. Have you bought one?

(/s?)

> This sounds like the market has reached equilibrium with the average dual income family paying 35% of their gross income on shelter.

You need to redo your math. The effort rate is calculated taking into account all fixed monthly expenses, not just rent.

By your own numbers, rent alone is already higher than the maximum admissible effort rate for a household with above average incomes. On top of this you still need to account for your actual cost of living.

You're looking at a scenario where a household with an average or above average income has to endure a effort rate well above 40%-50% to afford living in Barcelona.

To make matters worse, in Barcelona rents do not drop that much even if you start to entertain commutes of well over 2h/day.

There's nothing healthy about it.