Nov 07, 2024
A year has passed since New York City began enforcing its strict short-term rental ban, officially known as Local Law 18 (LL18). While the law aimed to address the city's housing crisis by reducing the number of properties available for short-term rentals like Airbnb, the impact on housing affordability remains uncertain.
Since the enforcement of LL18 in September 2023, the number of short-term rental listings has plummeted. Before the ban, there were over 22,000 listings in August 2023. By spring 2024, that figure had dropped to fewer than 5,000. The city’s intention was clear: to free up units previously reserved for short-term guests and make them available for long-term residents.
Former NYC Councilmember Ben Kallos, who authored LL18, emphasized the importance of bringing housing back to the market. "We don't have enough housing, and anything we can do to put housing back on the market is a good thing," he stated. The city's goal of increasing housing supply and resolving the housing crisis consist of reshaping the landscape for both STR and affordable housing.
However, despite the significant reduction in short-term rentals, the overall effect on the housing market is still ambiguous. On one hand, there has been a notable slowdown in rent growth. Between August 2023 and August 2024, the median asking rent in NYC increased by just 0.5%, a stark contrast to the nearly 7% growth seen during the same period in 2023 and the 31% increase in 2022.
Yet, looking at the broader metro area tells a different story. Rent prices rose by 3.5%, nearly identical to the previous year’s 3.4%, suggesting that the ban hasn’t significantly altered regional trends. Furthermore, long-term rental inventory in the city only grew by 3.4% in the year leading up to August 2024, a substantial drop from the 15.4% growth seen the previous year.
Interestingly, the ban has provided a boost to the hotel industry. With fewer Airbnb options available, hotels have been able to increase their prices. In the past year, NYC hotel prices rose by 7%, outpacing the national average of 2%. The city's hotel occupancy rate reached 87%, compared to the national average of 67%.
Sean Hennessey, a professor at NYU's Tisch Center of Hospitality, noted that existing hotels seem to be thriving, suggesting that the lack of alternative accommodations has contributed to rising prices.
One of the complications surrounding LL18’s effectiveness is the persistence of illegal short-term rentals. Some former Airbnb hosts have shifted to platforms like Facebook and Booking.com to continue renting their properties, which undermines the law’s intent to increase available housing stock.
One such host, who spoke anonymously, expressed frustration with the regulations, stating, "There are people who have extra space that they're never going to be renting out for a long-term tenant." He highlighted the need for laws that consider the realities of housing use. The loss of income hurts for individuals who rely on STR as a main income. Following this law, there has been a significant revenue loss causing financial uncertainty.
Airbnb’s vice president of public policy, Theo Yedinsky, has criticized LL18, arguing that the law is too broad and ineffective. He pointed out that the initial number of Airbnbs in NYC was not substantial enough to make a significant impact on housing supply or prices. Instead, he advocates for building more homes as the primary solution to affordability issues.
Defenders of the crackdown argue that any efforts to increase housing availability for everyday New Yorkers are beneficial. New York City Mayor Eric Adams emphasized the importance of holding illegal short-term rental operators accountable, citing their detrimental effects on both the hospitality industry and the affordable housing market.
As NYC reflects on the first year of its short-term rental ban, the outcome remains mixed. While the reduction in listings is evident, the impact on housing affordability and overall rental market dynamics is still unclear. As debates continue over the best path forward, it’s clear that the conversation about housing supply, rental regulations, and community needs is far from over.
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
