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It’s been a year since New York City began enforcing its near-ban on short-term rentals, including Airbnbs.While the number of short-term rentals has plummeted, the effect on the housing market is unclear.Airbnb says the ban is too broad and hasn’t made housing any more affordable.
New York City’s ban on most short-term rentals was supposed to make housing cheaper in the city. But one year in, it’s still unclear if it’s worked.
In September 2023, NYC began enforcing new regulations — known as Local Law 18 or LL18 — that severely restricted short-term rentals. The goal was to improve affordability by making units available that were previously only bookable through rental platforms like Airbnb.
“We don’t have enough housing, and anything we can do to put housing back on the market is a good thing,” former New York City Councilmember Ben Kallos, who authored LL18, told the New York Times in 2021.
One thing has become clear after a year: the Airbnb scene in NYC for stays shorter than 30 days has taken a hit. While there were over 22,000 short-term listings in August 2023, the month before the ban took effect, that number has fallen to below 5,000 as of this spring.
Beyond that, the picture is more mixed.
From the perspective of rate-price growth in NYC specifically, results are promising. Between August 2023 — the month before the law went into place — and August 2024, median asking rent in NYC has increased by just 0.5%, according to data from Zillow-owned real-estate-listing site StreetEasy. That’s a sharp slowdown from nearly 7% rent-price growth over the same period in 2023, and 31% for the 12 months ended August 2022.
A look at the broader metro area is less conclusive. New York’s rent prices grew 3.5% between August 2023 and August 2024 — about the same as the previous year’s 3.4%, according to Zillow. It’s also in line with the national increase in rents over the same period. Since LL18 went into effect, rent growth across the broader region hasn’t slowed and is in line with the rest of the country.
The data around NYC inventory availability is less encouraging. Long-term rental inventory in the city proper — which was supposed to get a boost — grew just 3.4% over the year ended August 2024, a fraction of the 15.4% rate seen over the prior year, according to StreetEasy.
And while it’s not readily apparent whether NYC renters are better off now, the year-old law’s impact on hotels has been undeniable. With so many Airbnbs out of the short-term rental picture, they’ve been able to charge more.
As such, NYC hotel prices are up 7% over the past year, compared to 2% nationally, according to data from real estate analytics firm CoStar. Further, NYC’s hotel occupancy rate was 87% in August of this year, while the national average was 67% for the same period.
“In a market like New York City, it doesn’t appear that there’s going to be any alternative that provides a release valve on those industry trends,” Sean Hennessey, a clinical associate professor at New York University’s Jonathan M. Tisch Center of Hospitality, told Business Insider. “If you’re an existing hotel, the future looks pretty bright.”
When you combine rent-growth deceleration, an inventory-growth slowdown, and sharply high hotel prices, it’s tough to get a solid directional reading of how LL18 has impacted the market overall. That’s especially true because it’s difficult to quantify how directly responsible the law is for shaping each of those three trends. This all adds to confusion around LL18’s efficacy.
Pushback against the law
One practice that’s contributed to the opaqueness of LL18’s impact has been former Airbnb hosts shifting to illegally renting their homes through other platforms like Facebook and Booking.com. By doing this, they’re not helping to open up inventory as intended by the law.
Business Insider spoke to Paul, a former Airbnb host who’s continued to rent his Astoria, Queens unit after having his short-term rental license application rejected by the city. Paul — whose name has been changed to protect his privacy — said he was pulling in $3,000 in a good month prior to the law, and crucial amount for his family.
“I think these laws are really poorly written,” Paul told Business Insider of the new regulations earlier this year. “There are people who have extra space that they’re never going to be renting out for a long-term tenant, and they’re just trying to make use of that space in a way that’s helpful, not just to themselves, but also to the community.”
Theo Yedinsky, vice president of public policy at Airbnb, also has reservations, telling BI that he thinks NYC’s focus on short-term rentals is misguided.
“I don’t think Local Law 18 should have passed,” he said. “I think the data is demonstrating that it’s ineffective.”
Yedinsky said there simply weren’t enough Airbnbs in NYC in the first place to impact the housing supply or prices in any meaningful way. It’s a conclusion some economists have agreed with.
Yedinsky instead argued that the only way to improve affordability in the city is to build many more homes.
“The problem is supply,” he said. “The problem is new housing.”
In contrast to the blanket city-wide approach New York took, Yedinsky says Airbnb supports narrower, more targeted regulations. He pointed to San Diego, where there is a citywide cap on the number of whole-home short-term rentals at 1% of overall housing. However, there is an exception for the picturesque, tourist-friendly beachfront neighborhood of Mission Beach, where short-term rentals are allowed to be 30% of overall housing.
On the other side of the aisle, defenders of the crackdown say that any effort to increase the number of homes available to everyday New Yorkers is a step in the right direction.
“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.
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