The AirBnB Bubble Popping Will Pop the Housing Bubble, by Charles Hugh Smith

A lot of houses were bought to be used as AirBnB rentals. Now the bottom’s falling out of that market, and there may be a lot of former AirBnB houses on the market soon. From Charles Hugh Smith at oftwominds.com:

This is how bubbles collapse: the “vital few” 4% sell at whatever the market will bear, pushing prices down, and the 64% awaken to the rapidly narrowing window for locking in bubble capital gains.

Here’s how we can tell if a speculative bubble is a bubble: everyone says it isn’t a bubble–the market has reached a “permanently high plateau” because valuations are now fairly priced, etc.

Housing globally is in a bubble (See chart below) which we’re constantly assured isn’t a bubble. As I discussed yesterday ( The Problem Isn’t a Housing Shortage, It’s the Concentration of Ownership by the Wealthy), this bubble is fundamentally an artifact of central bank and government policies that enrich the already-rich, who were incentivized to outbid each other with low-cost credit to snap up “investment properties” with their “surplus capital” that generate more income and capital gains that cash, which until recently was “trash” due to near-zero savings yields.

Many wealthy families collect multiple properties via inheritance, as second (vacation) homes or as long-term rentals. This hoarding is (as I explained) the only possible result of policies that asymmetrically distribute credit, and thus income and capital gains, to the already-wealthy rather than to the not-yet-wealthy. This policy-driven hoarding / concentration of housing in the top 10% is one factor driving rents higher due to artificial scarcity–a scarcity created by central bank and government policies, not the “market.”

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