This happens to any platform using algorithmic pricing. Any time there is an unexpected event that either constrains supply or increases demand (or both), the algos go haywire. Then the the platform has to put in checks to prevent it from happening again.
Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.
The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
> The hard question is how do you find the balance?
That's an easy question - you find the balance by letting people do what they want, then it automatically balances.
Banning that, you can't find the balance because you've banned the mechanism that balances.
The sellers are definitely price-sensitive though. The choice isn't between a $350 trip and a $20 one (because demand far outstrips supply at the point), it's $350 or no deal, or at best a lottery ticket to see if you're one of the lucky 5% of people who can get a ride at the old price.
When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
> The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
> The hard question is how do you find the balance?
Why is that a hard question? What balance are you looking to find?
So correct me if I’m wrong but Airbnb does not recommend a price. Theres no “algorithm”
Nor do they review prices. You could post a place for $1million a night and they won’t notice or care. It just won’t get rented.
> The hard question is how do you find the balance?
If only there were an entire field of study dedicated to matching supply and demand to maximize utility while encouraging efficient resource allocation...
It happens all the time, actually. It's what happened to Gamestop. A few people really wanted the stock and the price just shot up. The worst was the Reddit IPO. The price just kept going up and the Reddit team sold stock at high prices instead of serving the community. It's just greed.
People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.
Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.
The article doesn't make it clear whether it was AirBNB itself that increased prices, or whether it was hosts. And moreover, it also doesn't even give one example of a before and after price. I'd like to see at least one example.
Host here. Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.
Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.
if airbnb raised the prices and the market stayed strong, they'd raise the prices more.
the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.
the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.
let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.
if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
Is anyone tracking these platforms? Today coincidentally I got a Lyft from the airport to home and due to traffic it would take 1 hour, the price asked was $125. Ok steep, but the poor driver would be stuck with me for an hour.
BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.
Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.
If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Isn’t the underlying assumption here that supply is essentially infinite (or at least comparable to demand)? I think is the underlying assumption with any such statement. If the assumption doesn’t hold true then I am not sure the statement holds true (perhaps only till there is some supply).
> If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.
You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
Up here in North Idaho...my landlord that I was leaving told me how much more expensive things are going to be since the fires in California...everyone wanting to move here.
I already found another house cheaper/better.
The supply of housing is more elastic than you think. Some people have spare bedrooms, or second homes in LA. They may have previously chosen to leave them vacant, but for many people the higher rates they can get on Airbnb can entice them to list them. This happens at the margins—it’s not an all or nothing thing. So the higher people can earn renting out available space, the more they’ll be willing to rent. At some price point, even a billionaire will rent out their garage.
So? Let the free market define the correct price. It’s not like there’s thousands of alternatives to their platform that are better for both renter and landlord, and by regulating them into controlled prices all you’re doing is cementing their monopoly position. Haven’t we learned this lesson yet?
How is it any different than "congestion pricing"? Last time I experienced such, was on my way from the airport to the city. Unfortunately someone had jumped on the tracks, and the trains were locked down for 3 hours while the police etc. came to investigate the scene. During peak hours. Lines to the taxi and bus must have been 200 meters long and 5 meters wide. Checked out Uber, got something like $250 for a 30 min drive.
Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
This is an absurd diversion from how poorly LA leadership is performing.
Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave.
LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds.
In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy.
Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway?
Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
It might seem logical to connect the number of fires and the fire department budget, after all, it's right there in the name! But in reality, most fire departments spend almost none of their time putting out fires. It's mostly first-responder/EMT work.
jedberg|7 months ago
Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.
The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
The hard question is how do you find the balance?
eviks|7 months ago
That's an easy question - you find the balance by letting people do what they want, then it automatically balances. Banning that, you can't find the balance because you've banned the mechanism that balances.
Y_Y|7 months ago
When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
thaumasiotes|7 months ago
> The hard question is how do you find the balance?
Why is that a hard question? What balance are you looking to find?
more_corn|7 months ago
unknown|7 months ago
[deleted]
bko|7 months ago
If only there were an entire field of study dedicated to matching supply and demand to maximize utility while encouraging efficient resource allocation...
renewiltord|7 months ago
People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.
Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.
vouaobrasil|7 months ago
legitster|7 months ago
Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
fsckboy|7 months ago
we don't need to know.
if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.
if airbnb raised the prices and the market stayed strong, they'd raise the prices more.
the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.
the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.
let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.
if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
whatever1|7 months ago
BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.
$62 before tip.
vladvasiliu|7 months ago
aurareturn|7 months ago
Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.
If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
sanp|7 months ago
MangoToupe|7 months ago
Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.
You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
VarFarYonder|7 months ago
But I guess if we accepted that, nobody would be to blame.
BallsInIt|7 months ago
goodpoint|7 months ago
rcpt|7 months ago
diziet|7 months ago
ipaddr|7 months ago
Ccecil|7 months ago
It isn't just a regional problem.
baron816|7 months ago
exabrial|7 months ago
TrackerFF|7 months ago
Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
unknown|7 months ago
[deleted]
unknown|7 months ago
[deleted]
sschueller|7 months ago
[deleted]
csmpltn|7 months ago
[deleted]
tropicalfruit|7 months ago
shlant|7 months ago
Hilift|7 months ago
Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave.
LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds.
In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy.
Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway?
Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
nerdsniper|7 months ago
Genuine question because you seem passionate about it and I don’t have a good answer for this, I wrestle with it often.
Where should they put themselves instead? Or where should the state allow them to be?
amanaplanacanal|7 months ago
harvey9|7 months ago