Technological innovation changes industries. How fast such better ideas take hold often depends on government actions. And while new technologies raise difficult questions, poor economic logic never should be the justification for clamping down on new ideas.
As the Asheville Citizen-Times reports, the city of Asheville is poised to crack down on local homeowners who list their homes on sharing services like Airbnb and Vacation Rental by Owner. These services inform tourists or other visitors who would like to rent a house, apartment, or even a room for one or more nights (but not sign a lease) from homeowners who have space to rent.
The city is adding an employee who will do nothing but enforce its ban on short-term rentals. It also is considering raising the penalty for violations to $500 a night, up from the current $100.
Proponents of the crackdown offer a rather odd justification: Allowing people to rent a house for less than a month would drive up rents across the city, harming those in need of affordable housing. “There would easily be a significant number of houses being bought for the purpose of short-term rentals that would in turn drive up land values and housing costs and in turn increase the rental rates,” said Vice Mayor Marc Hunt.
Hunt’s rationale is either counterproductive or wrong. By all accounts, Asheville enjoys being a tourist mecca, and its economy is built in no small part around out-of-town visitors’ money. Now, local leaders appear to be saying that they like tourists and the money they bring — except when they don’t, when those visitors choose to stay in places that aren’t approved by city officials.
Though Asheville often is portrayed as a trendy, highly desirable place to live, the reality is a bit different. While the Asheville area certainly is growing, the Triangle, Charlotte, and Wilmington areas are gaining population at a greater clip. The per-capita income in Buncombe County, where Asheville is located, is below the state average; The region simply has relatively few high-paying jobs.
If there really is a huge, unfilled demand for lodging for potential visitors to Asheville, that suggests the city is leaving an awful lot of money on the table. More tourists should result in more sales by local businesses, more sales tax revenue, and, yes, more jobs and opportunity for residents. And the locals who stand to benefit most include those who need affordable housing.
One city council member who gets it is Cecil Bothwell, one of the city’s most liberal elected officials. “I think any attempt to regulate a business plan that permits local entrepreneurs to use international websites to attract business is a fool’s errand,” Bothwell said. Bothwell also questions how many people would buy houses in Asheville just to rent them for a week or weekend at a time.
In any case, Hunt’s argument sends an awful message to city landowners: He views home value increases as a very bad thing, even after the haircut they took during the Great Recession. Given that attitude, why anyone would want to invest in the city’s future by buying property there is a mystery.
Creating the proper regulatory framework for services like Airbnb and Vacation Rental by Owner is complex, as it necessarily involves addressing health and safety standards and zoning rules. Rather than relying in part on fuzzy economic logic to slow innovation, a much better way for the city to address rising housing costs would be to re-examine the regulations it places on new construction.
Unnecessary rules, excessive requirements, and burdensome zoning drive up new home prices.
Michael Lowrey is an associate editor of Carolina Journal.