New York is the city that never sleeps, the birthplace of skyscrapers, the location of some of Hollywood’s highest-grossing movies (and TV series), and also, for a few months, a massive real estate laboratory. Big and interesting. Tired of seeing how short-term rentals offered by websites such as Airbnb, Vrbo or Booking, which primarily target tourists, were driving up apartment prices, New York officials in September enacted Local Law 18, a rule that practically restricts such rentals. Very popular among travelers.
The point was to find out whether this initiative would help alleviate the abuses and price gouging New Yorkers face every time they have to search for a place to live. Now, from a first half-year vitality perspective, we already have some data to assess its scope. And the readings he left are less than flattering for New York officials.
Not for them, not for the tourists visiting the Big Apple.
Rental price table published by Statista in 2016.
New York’s big laboratory. New York is not a unique situation. Many cities around the world, including major metropolises such as Barcelona, London, Berlin or Florence, have begun to streamline Airbnb’s extensive rental offer with more or less success. However, the situation of New York is particularly interesting due to the size of its population, the density of tourists and the measures taken by the authorities.
Local Law 8, which came into force here in September 2023, requires hosts for short-term stays to register and prohibits Airbnb, Vrbo or similar websites from managing unregistered short-term stays.
Set limits. But if the measure is interesting for anything, it’s because of the requirements it imposes on those who want to offer short-term rentals. The guidelines are very specific and determine who can enter the market and how. In addition to being registered and complying with certain rules, owners cannot rent an entire apartment or house, must be present for the entire stay and cannot receive more than two guests.
Bloomberg also reported that getting a permit in the fall wasn’t easy either: only 25% of requests had been processed by then.
Click on the image to go to the tweet.
Scissors in the offer. The results of this scenario change did not take long to arrive. The number of Airbnbs available in the short term dropped almost immediately by more than 15,000, according to data collected by research firm AirDNA. While 21,500 were counted in August 2023, with the new law in force last February, their calculations showed 3,300. For registration, it considers units available in the short term for less than 30 days.
Airbnb counts about 4,600 short-term rentals; This in any case represents a significant decrease compared to the data recorded by AirDNA last summer. Wired also explains that applying for a permit is no guarantee you’ll get one, at least not quickly: As of Feb. 26, of the 5,783 short-term rental applications the city had received, 1,594 were approved, 900 were denied and returned. Just over 3,000.
NY, less attractive. Airbnb itself was, of course, one of the first to assess the scope of the measure. The platform is an interested party and the new regulations directly affect its business model, but its conclusions are remarkable. In December, it claimed to have conducted a survey that found 18% of travelers were less likely to visit New York after the new rules were implemented, 65% felt deterred by hotel prices, and 54% were more likely to make some illegal searches. accommodation in the city.
The platform warned that such a scenario could lead to a significant loss of revenue for the public purse. More precisely, a tax loss of 1.1 billion dollars was mentioned, and a warning was made that the daily rental “shortage” and the increase in hotel prices could damage the touristic image of the city. “This has led to a prevailing perception that New York is becoming more expensive and inaccessible to travelers,” he concludes.
Click on the image to go to the tweet.
If there is no Airbnb, hotel… This is the conclusion reached by many tourists who find themselves faced with a discounted offer on Airbnb or who do not directly agree to share accommodation with their hosts. The problem is that less supply often translates into higher prices.
CoStar data collected by TWSJ The show shows that although hotels in the city were charging an average of $355 per night in December 2022, that figure had already risen to 393 last December. Christmas is one of the times of greatest tourist demand in the Big Apple, but the increase is equally telling.
Small increases in average prices per room were also noted in January and February, reaching just over $200 per night in both cases. This did not prevent hotel occupancy rates from recording small increases of 4% and 3.4% respectively in the same months.
more price. They’re not the only ones getting more expensive. TWSJ Complete homes listed on Airbnb or Vrbo for less than 30 days are asking for around $365 in 2022, he explains. The equivalent bid in 2023 was $404. The price of private rooms remained the same. Evidence that hotels are meeting at least some of the demand is that there are accommodations that have tripled the flow of bookings coming to them through Airbnb.
…or to search outside New York. This is the other alternative for visitors. Especially for those who don’t want to pay the cost of a good hotel in the Big Apple. Media such as wired or Wall StreetJournal They point out that the biggest beneficiaries of the change in New Jersey regulations, at least when we look at the flow of tourists, are New Jersey’s towns close to the metropolitan area. To be more precise, they point to Jersey City, Hoboken or Weehawken in Hudson County, which offer good access to downtown Manhattan.
AirDNA data shows demand for short-term rentals in Jersey City is up 77% compared to last year. There was a 45 percent increase in Weehawken and a 32 percent increase in Hoboken. The website, which specializes in the skift industry, also reflects that a decline in demand growth in New York in December was accompanied by an increase in Jersey and Newark.
What about housing in New York? The most curious thing is that the New York housing market did not react very well either. AirDNA data reveals that there are nearly 35,000 NY apartments listed on Airbnb for stays of 30 nights or more; This makes them legal and does not require a short-term rental license. The data makes for interesting and intriguing reading: there appears to be a significant number of homes advertised on Airbnb in the city, and despite the change in legislation there has not been a renewed focus on long-term rentals for permanent residents.
One explanation for this is that some small property owners who offer their properties through Airbnb are not willing to become traditional hosts. For them, short-term rentals were a way to supplement their income or make their home profitable when they didn’t need it. There are people looking for alternatives on websites such as Craigslist, Facebook Marketplace or Houfy. Wired explains that the city is currently working on enforcement of the new law and is not sanctioning illegal renters.
“It gave me flexibility.” From theory to special cases. A few months ago Country This was Lila, who lived between Buenos Aires and New York City, where she rented her apartment during her seasons in Argentina. This strange arrangement offered her a convenient way to reduce her expenses and, above all, to ensure that she could have her home whenever she needed it. “Airbnb gave me flexibility,” she said. When the newspaper spoke to him, he had gone to the Big Apple to vacate his apartment.
What do the prices say?. The new rule came into force in September, and seven months may not be enough time to understand its impact on house prices, but there are already some interesting indicators. For example, real estate platform Zillow estimates that the median rent in New York City is currently around $3,464, resulting in an annual increase of $109.
On Apartament List, another industry website, they present a slightly different picture in form, but not in substance: Their calculations conclude that the overall average rent in the city is $2,220, up 2.3% annually. Interestingly, Jersey City and Hoboken are recording slight declines of less than one percentage point. The largest increase, almost 4%, occurred in western New York.
“In the six months since New York City’s short-term rental rules went into effect, we’ve seen travelers face record hotel prices and former homeowners struggle with lost income, but no improvement in housing costs,” Airbnb’s Nathan Rotman said. said. . But there are also signs that point in another direction. Last December, real estate firm Douglass Elliman noticed a decline in rental prices in Manhattan and Brooklyn, popular with tourists.
Image | Benjamin Gremler (Unsplash)
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Ashley Johnson is a science writer for “Div Bracket”. With a background in the natural sciences and a passion for exploring the mysteries of the universe, she provides in-depth coverage of the latest scientific developments.