Yahoo Finance NYC shuttered 80% of its Airbnbs in an attempt to make housing more affordable. All that's done so far is make hotels more expensive.
Last year, New York City began enforcing its near-ban on short-term rentals, including Airbnbs.
As of June 24, there were just 2,276 legal short-term rentals, according to the city government.
City officials say the law aims to ease the housing-affordability crisis and boost the hotel industry.
Last September, New York City began enforcing its strict new regulations on short-term rentals. Since then, the number of legal short-term rentals listed on Airbnb and other platforms has plummeted.
Less than a year into the city's policy, known as Local Law 18, it's not clear whether the near-ban is achieving one of its central goals: relieving pressure on the city's severe housing shortage. But as summer tourism heats up, the dearth of rentals and rising hotel-room prices mean visitors to the city are in for an even pricier trip than they probably bargained for.
Under LL18, someone can rent out their home for less than 30 days only if their unit is in an approved building, they rent to a maximum of two guests at a time, and they stay in the home with their guests, among other restrictions. Potential hosts have to apply for approval from the Office of Special Enforcement under the Mayor's Office of Criminal Justice.
The city opened its application portal in March last year, and as of June 24, it had received 6,395 total applications for short-term rentals, according to OSE. The city has approved 2,276 of these, denied 1,746, and asked 2,269 applicants to submit additional information, the office said.
That small number of approvals has led to a dramatic decline in short-term listings since last year, according to AirDNA, a collector of industry data. From August to September of last year, when the city began enforcing LL18, Airbnb listings for stays of less than 30 days plummeted from 22,246 to 8,039. They fell again to a low of 2,646 in October but have slowly climbed since then to nearly 4,000 in May, about 82% below the level last August.
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At the same time, the number of Airbnb listings for stays longer than 30 days rose rapidly. Many of these new medium-term rentals were simply converted from short-term, AirDNA's chief economist, Jamie Lane, told Business Insider.
"When we actually looked at the total number of listings on Airbnb, from October, once the dust had settled, to pre-law going into effect, it was only about a 14% decline," Lane said.
Lane said the vast majority of New York City's short-term rental inventory was listed on Airbnb, while a small portion of it was on Vrbo and Booking.com.
The city hasn't begun fining hosts for violating LL18. It's working with Airbnb and other short-term rental companies to ensure they're in compliance before it begins cracking down.
"That's resulted in a massive reduction in illegal listings across the major platforms," Christian Klossner, the executive director of OSE, told BI. "This law was not about new fines for people. This law was about preventing it at the source, and that's what we've done."
The city won't say how many short-term rentals it's found that violate LL18, but it says it'll publish that number in its annual report in September. But Klossner said the city was continuing to conduct inspections based on complaints and issue fines for violations of long-standing rental regulations.
The city has long barred homeowners from renting out entire units for less than 30 days, but it didn't have the power to enforce these regulations until LL18 was passed.
Impacts of the near-ban
LL18 was motivated by the city's housing-affordability crisis, caused in large part by a severe housing shortage. Pro-housing supporters of LL18 argue New York City needs to prioritize homes over hotel rooms.
"Illegal short-term rental operators hurt our hospitality industry and make it harder for New Yorkers to find affordable housing, and we must ensure we are holding them accountable," New York City Mayor Eric Adams said in a statement this past March.
Short-term rentals, including Airbnbs, can take homes that would otherwise be lived in full time off the market, potentially exacerbating the housing shortage. The city's home-vacancy rate is 1.4%, the lowest in more than 50 years, according to a recent city report. It can also help inflate home prices and rents.
The former city comptroller Scott Stringer found in a 2018 report that for every 1% of all homes in a New York City neighborhood listed on Airbnb, rent in that neighborhood went up by 1.58%. "Between 2009 and 2016, approximately 9.2 percent of the citywide increase in rental rates can be attributed to Airbnb," the report said.
But Airbnb and other critics say the near-ban won't do much to address the housing crisis and will hurt homeowners who relied on the rental income and visitors who couldn't afford sky-high hotel costs. There is a slew of factors — including new housing construction and migration patterns — that impact housing costs and vacancy rates. But there's some evidence, including from Irvine, California, that restricting short-term rentals can reduce rents. It's not clear how much of a role LL18 has played so far in changing these conditions.
The hotel industry has seen its revenue soar recently. Occupancy rates hit 82% last year, while the national average sits at 63% after falling to 47% in 2020. The average room price reached a record $301 a night, up 8.5% since 2022. The vacancy decline and price surge are probably both a result of the disappearance of so many short-term rentals and the fact that about 20% of city hotels are being used to shelter migrants, among other factors.
"It's not surprising to me that you remove 20,000 short-term rentals, and all of a sudden, hotel rates are going up by 10%," Lane said.
Airbnb sued the city to prevent LL18 from going into effect but lost in court last August. "New York City's short-term rental rules have significantly reduced accommodation options for visitors and contributed to higher hotel prices that are making it more expensive to visit the Big Apple," Nathan Rotman, Airbnb's Northeast policy lead, said in a statement to BI. "More importantly, the rules haven't improved housing affordability in the city— rents continue to rise and housing stock has reached historic lows."
Some Airbnb hosts say the measures go too far, choking small-time hosts who rely on the extra income, even though the original target was much bigger empires.
One New York City host told BI that they considered the ban a "slap in the face" and were continuing to rent illegally even with the threat of the new fines.
"I see these buildings on Central Park with penthouses that are empty because nobody can pay millions for apartments like that," the owner, who remained anonymous for privacy reasons, told BI. "But here I am fighting to stay in New York in my pre-war walk-up building."
Correction — June 26, 2024: An earlier version of this story misstated a statistic on New York City hotel rooms being used to shelter migrants. Twenty percent of New York City hotels are being used to shelter migrants, not 20% of New York City hotel rooms.
Read the original article on Business Insider
