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Commentary By Jared Meyer

Airbnb Hosts Could Be Deemed Illegal By San Francisco

Economics Regulatory Policy

Effective July 27, Airbnb hosts will have to register their properties with the city. If they don't, Airbnb itself will be fined for having these "illegal" properties listed on its site. This isn't the first time California politicians have tried to make it more difficult for Airbnb to operate. San Francisco, supposedly a tech hub, just can't help itself from regulating away innovation.

“It's clear that putting more restrictions on renting property will not solve the housing shortage in San Francisco”

It's also no surprise that housing prices in San Francisco continue to skyrocket. As I wrote for Forbes in November 2015, contrary to politicians' claims, short-term rental platforms like Airbnb are not the cause of this trend. Rather, it's the lack of available permits to build more housing to meet consumer demand:

Although the call to fix housing shortages is welcome, the real culprit of high rents is local governments--not Airbnb.

Specifically, housing shortages in many cities, including San Francisco and Los Angeles, were caused and perpetuated by city governments' unwillingness to increase their housing supply.

Take California, for instance, where the problems are most obvious. Since the 1960s, the residential construction rate in California has significantly declined and, as a result, real housing prices increased by 385% from 1970 to 2010. Though limits on new construction are not the sole cause for increasing housing prices, they are a major factor.

The least affordable housing markets are those where new housing permits have not kept up with population growth. For example, in Los Angeles, there were 28,000 housing projects started in 2014. Meanwhile, Houston, a city with no housing shortage and 1.7 million fewer people than Los Angeles, started 64,000 housing projects in 2014. This lack of housing is not due to overcrowding--Los Angeles has roughly 8,000 people per square mile, which is one-third of New York City's level.

Airbnb Is Not To Blame

It's clear that putting more restrictions on renting property will not solve the housing shortage in San Francisco and in other major metro areas across the country. The politicians pushing these measures, such as California Democratic Senator Dianne Feinstein, are not interested in helping consumers. Rather they are only concerned with their self-interest. Again, from my Forbes article:

“In order to fix [the] problem, we need fewer restrictions on building permits in order to meet the ever-growing demand for housing...”

It is easy for politicians to blame corporations for problems for which politicians are ultimately responsible. This is precisely what California Senator Dianne Feinstein is doing. She recently published an article in the San Francisco Chronicle arguing in favor of the city's Proposition F, which would limit short-term rentals to 75 days a year.

According to Feinstein, this ballot initiative would help alleviate the city's housing shortage. Predictably, Feinstein does not mention the lack of housing permits in cities across her state. When evaluating Feinstein's arguments, it is important to note that she and her husband have a stake worth up to $25 million in a San Francisco hotel.

In order to fix this problem, we need fewer restrictions on building permits in order to meet the ever-growing demand for housing, not more protections for the incumbent hotel industry. Consumers lose out when short-term rentals are curtailed, and housing is still going to be just as pricey even if a city outright bans Airbnb. After July 27, good luck trying to find a cheap place to stay in San Francisco for the weekend.

This piece originally appeared on Epic Times

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Jared Meyer is a fellow at the Manhattan Institute's Economics21. Follow him on Twitter here.

This piece originally appeared in Epic Times