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Originally Posted by MonkeyRonin
Of course we have room to grow, but how is that relevant? The point is that if housing is being built, but a significant proportion of that is being used for investment/airbnb purposes instead of it's actual intended use as housing, then even more housing needs to be built, which is both inefficient and drives prices up further than they would otherwise need to; and that the free market cannot just infinitely provide further supply to meet theoretically infinite demand due to multiple real-world physical constraints (of which space is just one).
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To further this point I think it's important to look at the type of housing airbnb is replacing. As mentioned before I don't think short term rentals are the cause of Toronto's housing crisis, or even a major factor compared to the use of real estate as an investment vehicle. But a lot of the housing we'd consider affordable in central areas - small apartments and places verging on but not quite SROs (buildings with lots of small units) is what's being used for airbnbs. Even if all regulations were thrown out the window I can't see this type of housing being replaced at anywhere near the rate it needs to be. Now look at smaller centres that experience high levels of tourism but little economic/population growth - it's easy to see how the market gets massively distorted.
Of course on the other end of the spectrum we have stuff like ICE condos - two massive towers that are seemingly predominantly Airbnb. To the point where the condo board has an exclusivity deal for listing and takes a cut of the listing fees! Who is this benefiting exactly? Constant complaints from people who actually want to live in their units and from the City's perspective it's just another condo - not a commercial building with a much higher usage rate. I'm not sure how anyone can say this is an efficient use of resources.
Quote:
Originally Posted by MonkeyRonin
This is such a simplistic take on economics. Just because money is being spent does not mean equal value will be derived from it, regardless of what it is being spent on. Put simply, there are more productive and less productive uses of money, and real estate is one of the less productive ones, as it encourages rent-seeking behaviour instead of real wealth growth.
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Indeed.
Also not clear how someone can claim that any form or real estate investment is economically productive, yet also think that the housing crisis can be solved simply by allowing more permissive zoning (which again, I think is only a small part of the issue). These seem like contradictory statements to me - if the viability of real estate investment hinges on policy decisions then it seems maybe not the most productive/efficient investment.