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Paying Rent

NYC’s Airbnb Law Has Thinned Out Listings. But Can It Bring Down Rents?

If all short-term rentals could be instantly converted to regular rental housing, it would nearly triple the city’s number of available units.

A view of a NYC fire escape with AC units next to it.

(Daryan Shamkhali / Unsplash)

The Great Airbnb War entered its latest chapter five months ago, when New York City enacted its crackdown on short-term vacation rentals, forcing anyone offering stays of less than 30 days to prove their legality by registering with the city. Airbnb hosts have charged that the law is an attack on "middle-class" homeowners and a sop to the hotel industry. Airbnb claims that soaring lodging prices are driving away tourists (which some New Yorkers are just fine with).

As for what the new law has done for the city housing market, though, it's been largely crickets. A central justification of Local Law 18, passed by the City Council in late 2021 and put in effect last September, was to stop building owners from pulling apartments off the rental market to offer them up to tourists—something that was always against the law, but that no one bothered to enforce in the decade-plus since Airbnb and its ilk first arrived on the scene. (Owner-occupants renting out rooms in their own homes was, and remains, legal.) Christian Klossner, head of the Mayor's Office of Special Enforcement, testified last year that as of 2018, the city had an estimated 60,000 illegal listings, including 43,000 on Airbnb alone

So is the new law working to put more apartments back in play for New Yorkers? Can it move the needle on the city's historic housing crunch? And could we even tell if it were?

Here's a rundown of what we know and what we don't. 

Did Airbnbs really cause rents to rise? 

The short answer: Probably, yes. The long answer: There will be math.

"The housing crisis is not at the end of the day caused primarily by Airbnb," says Charlie Dulik, organizing director at Housing Conservation Coordinators, a Manhattan-based tenant rights group. "But I think when you have tens of thousands of units taken out of the rental market, that for sure has a significant effect on rents."

Airbnb's defenders like to point out that its number of units for rent is dwarfed by New York City's 2.2 million rental units overall. But in a city with a vacancy rate permanently hovering in the low single digits, even soaking up 60,000 rental units can have an outsized impact. According to the City's latest Housing and Vacancy Survey, in early 2023, New York had just over 33,000 units vacant and available for rent—meaning if all short-term rentals could be instantly converted to regular rental housing, it would nearly triple the city's number of available units. 

Basic supply-and-demand economics tells us a shift like that should show up in how much landlords can charge in rent, and that's exactly what multiple housing studies have found. A 2018 report by researchers from McGill University found that Airbnb listings in New York drove up rents citywide by an additional 1.4 percent, or $32 a month, over a three-year span. Then-City Comptroller Scott Stringer followed with a report that in the initial explosion of Airbnb listings—from 1,000 in 2010 to more than 43,000 five years later—rents rose especially fast in neighborhoods with a high concentration of short-term rentals. The comptroller's office determined that nine percent of the entire rise in city rents from 2009 to 2016, and as much as 20 percent in high-Airbnb neighborhoods like Williamsburg and Chelsea, was the result of the company's expansion.

While studies of New York only showed the impact of shunting apartments into the tourist market, other cities revealed what happened when the plug was pulled. Irvine, California, began enforcing a ban on short-term stays in residential areas in 2019, and two years later, citywide rents had fallen by three percent. In the Tasmanian capital of Hobart, researchers found that when 287 Airbnbs disappeared from the short-term market during Australia's strict COVID lockdown in April 2020, the number of available long-term rentals shot up by 204. Median rents in high-Airbnb-density neighborhoods, meanwhile, fell by between two percent and nine percent. 

Studies like these, along with the archetypal 21st-century New York experience of all-night tourist parties on the other side of your bedroom wall, started to get the attention of city renters and their advocates. Dulik notes that from 2017 to 2021, there were 11,934 complaints filed with the City about illegal short-term rentals, and about 15,000 violations issued. But with no legal infrastructure to force companies to yank illegal listings, he says, the City was largely helpless to do anything about it; it was "basically whack-a-mole."

Enter Local Law 18. East Village City Councilmember Carlina Rivera, one of the bill's sponsors and one of the council's most vocal advocates for Airbnb regulation since the law's lead sponsor Ben Kallos was term-limited out in 2021, says her interest in unregistered short-term rentals—"what we call illegal hotels"—came as a tenant organizer at the community group Good Old Lower East Side, where she heard repeated complaints about a revolving door of short-term renters cycling through local buildings. Once elected to the council in 2017, Rivera says, she determined that "the way that the illegal hotel market had really increased was affecting the housing stock that we so desperately needed." 

The trick, as with seemingly everything everywhere involving tourism, was to find a way to keep the good parts while reining in unwanted side effects. "We wanted people to be able to continue to rent out their space legally, for those that need the supplemental income," says Rivera. "But we also wanted to ensure that there were regulations, there was a standard, and there were clear rules—and transparency—by the City."

Anti-Airbnb protesters outside City Hall in 2015. (William Alatriste / City Council)

Has Local Law 18 cut down the number of Airbnb listings?

As soon as the new registration law went into effect, the number of short-term rental listings in the city plummeted. According to stats compiled by Inside Airbnb, the organization launched by data cruncher Murray Cox in 2015, Airbnb listings alone for stays under 30 days cratered from 21,785 last August to 4,525 as of January 5. 

Local Law 18 requires hosts to register with the Mayor's Office of Special Enforcement, a small subagency of the Mayor's Office of Criminal Justice created by Michael Bloomberg in 2006 to monitor "quality of life" issues like nightclubs and adult entertainment. The application form demands information on the type of building the rental is in, confirmation that the hosts live in it (and will "immediately contact OSE to terminate the registration" if they move out), and any active listings on rental sites. As of February 5, according to OSE, nearly two-thirds of the 5,661 submitted application were either still in the agency's queue or on hold awaiting more information from applicants, with only 1,387 approved. It's a pace that many rental hosts have chafed at, but Klossner, the OSE head, says things are starting to speed up as they train more staff, with wait times to start processing applications down from three months in September to three days now.

Rivera says she hopes that as OSE churns through more applications and rejects some, more apartments will be kicked back to the regular rental market. "Clearly it's not going to happen overnight, it takes some time," she says. "But I think in the long run we will achieve what we set out to do."

What effect has Local Law 18 had on the housing market?

What exactly has happened to the tens of thousands of de-listed apartments is the subject of fierce debate. Early worries that hosts would flock to gray-market sites like Craigslist seem to have proven unfounded. "I really am skeptical that a mass of these are being listed illegally elsewhere," says Dulik. Rather, most appear to have switched to longer-term listings: Since last August, Airbnb listings for 30 days or more, which aren't restricted by City law, have leaped from 21,797 to 35,194, according to Inside Airbnb's numbers. The rental company Blueground, which alone boasts more than 700 New York City apartments for rent on Airbnb, is now offering a ton of furnished apartments, many of which may be converted short-term rentals.

If rentals are shifting to longer stays, who, exactly, is renting them? Both Airbnb and its hosts say stays of a month or longer can appeal to nurses or other workers on residencies, people visiting family, or those looking for temporary housing when first relocating to the city. 

"The mid-term market exists, but it's a lot more competitive," says Margenett Moore-Roberts, a Brooklyn homeowner who's rented out rooms since 2017. The difficulty for hosts, she says, is that it's hard to slot in enough longer stays to keep rooms filled year-round: "You can't maximize your opportunity, you can't maximize the calendar." 

According to Airbnb, the thousands of remaining short-term stays meet the City's legal requirements. Aside from units in "Class B" buildings—hotels and many SROs, basically—only rooms within owner-occupied apartments and houses can legally be rented, and owners must be present during visitors' stays. In practice, though, hundreds of apartments are currently listed on Airbnb as "entire home" and available for short-term stays: Cox's figures show more than 300 of these that are listed as registered with the City and not categorized as Class B, even though this is supposed to be illegal. 

On top of this, Cox notes, 265 rentals previously listed on the site as "entire home/apt" have since been recategorized as "private" or "shared" rooms—something Cox calls "highly suspicious": "How could an Airbnb advertised as a standalone apartment be converted to a private or shared room with the primary resident present?"

Possible scofflaw holdouts aside, what do the numbers show in terms of the new law's impact on rents? Not much, in part because the City only regularly collects broad rental data via its triennial Housing and Vacancy Survey. Since the latest survey period was January to June 2023, Local Law 18's effects won't be measurable until the next survey release in early 2027. Private rental listings companies can provide hints at the overall trends, but they're limited in scope: Streeteasy, probably the most comprehensive service, accounts for under 40 percent of all rental housing listings. A January report from City Comptroller Brad Lander's office cited a slight decline in average asking rents on Streeteasy since last August, while Airbnb pointed to rents having risen by 2.3 percent from a year earlier; since rents jumped last spring and summer and subsequently declined, both statements are true, but it's tough to say which is a more relevant comparison.

In any case, any impact on rents may not have fully kicked in yet. In Irvine, it took about five months for the city to see a sustained fall in rents after its crackdown on Airbnbs. Michael Seiler, a finance and real estate professor at the College of William & Mary who co-authored the study of that city, says possible reasons for that include lags in reporting time or just a scramble before the market resettles. "After the Airbnb ban, Airbnb owners require time to readjust and switch over from short-term to long-term rentals," Seiler says.

Another possible theory: Dulik wonders if some former short-term rental hosts are just sitting on their properties and "not listing those right now in the hopes that something changes politically."

People in favor of Airbnb at City Hall in 2015. (William Alatriste / City Council)

Can Airbnb hosts strike back? 

Changing things politically is the intent of Restore Homeowner Autonomy and Rights, somewhat awkwardly backronymed as RHOAR. More than a decade of Airbnb has created not just an industry of professional hosting companies like Blueground, but a class of homeowners who either bought or renovated homes with plans of paying off the costs through short-term rentals. Just as the home mortgage interest deduction created a huge pool of people who'd bought housing counting on that widely derided tax break to pay off their outsized purchase prices, many homeowners have factored the Airbnb economy into their life plans, and those in RHOAR say pulling the rug out now would lead to their financial doom.

Laura Burgess, a divorced mother of three, says renting out rooms in her six-bedroom house in Ditmas Park has enabled her to stay in the city. "There were times when my children lived in my basement, I lived in my dining room, and I rented out all six bedrooms to pay the bills—we did that for three years," she says. She currently occupies one floor with her children, and rents out two bedrooms on the top floor. "If I cannot rent out short-term then I am looking at either moving out of my house and renting the whole house out or selling."

As an owner-occupant, Burgess can still legally rent out rooms short-term, and has registered with the City to do so. But Local Law 18 has stepped up enforcement of other existing housing law, such as limiting "family" dwellings to hosting two people at once, even if they share a room. As her children start college, Burgess says, her plan was to rent out their rooms for additional income, but the new law makes that impossible.

Owner-occupant homeowners like Burgess aren't typical of the short-term rental market, which RHOAR argues would make it a reasonable compromise to fully exempt them from the registration law. "We absolutely support common-sense regulation around the gross exploitation of short-term rentals in the city," says Moore-Roberts, who is a RHOAR organizer. "We know that there were bad actors, we know there were some arbitrage models going on, where people had dozens if not hundreds of listings."

RHOAR's Gia Sharp, a Brooklyn homeowner who started renting out rooms in her house for short-term stays in 2022, says the group is "in deep talks" with lawyers about how to draft fresh legislation to carve out one- and two-family homes from the new law: "We're hoping we can get some movement on it sooner than later." 

Airbnb itself says it hopes the City reconsiders Local Law 18, but wouldn't provide any specific asks. None of the seven members of the council's Housing Committee responded to Hell Gate queries about whether they would consider amending Local Law 18.

With the Housing and Vacancy Survey now completed, the next indicator of how the law is working out may come this spring, when OSE anticipates launching a promised public registry of registered short-term rental properties. In the meantime, watch the real estate listings for a surge in furnished rentals, and hope that it somehow trickles down to the huddled masses.

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