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NYC: Legal restrictions increase lodging prices and do not solve the housing crisis

Short-term rental properties have little proven influence on rent prices and housing availability, as they represent only a very small part of the market.

06/09/2024 - The stringent restrictions on short-term rentals introduced in New York a year ago, aimed at resolving the housing crisis and controlling the market, are not producing the expected effect, according to Airbnb's report. The report titled “NYC’s rules one year later: Higher prices for travelers, no housing impact" points out that tourists are paying more for accommodations, while rents for residents continue to rise, with no improvement in housing availability.

Could the same scenario be happening in Canada? Previous data has already shown that short-term rentals, like Airbnb, have little proven influence on rent prices and housing availability, as they represent a very small portion of the market. Read more about the impact of Airbnb on rent prices in Canada and Quebec.

Key conclusions from Airbnb’s report on NYC:

  • Increase in hotel prices: In one year, the average hotel price in New York rose by 7.4%, compared to a national average of 2.1%, making it harder for budget-conscious travelers.
  • No effect on rents: The average residential rent in New York increased by 3.4% in the first 11 months following the implementation of the law, reaching a historic peak of $5,000 in downtown Manhattan.
  • Stagnation of vacancy rates: The vacancy rate for apartments remained unchanged at 3.4%, suggesting that restrictions on Airbnb did not increase the supply of available housing.
  • Negative impact on outer boroughs: Neighborhoods like Brooklyn and Queens, which relied heavily on short-term rentals, lost a significant portion of their economic activity, with fewer tourists and reduced income for local businesses.
  • Loss for small hosts: Many hosts, who relied on Airbnb to supplement their income, were severely affected, especially in areas outside Manhattan where hotels are scarce.

Regulations may have a positive effect by increasing the safety and quality of Airbnb rentals, ensuring that properties operate within established standards. However, the limitation of licenses reduces the availability of short-term accommodations and leaves even local tourists with fewer options for places to stay during peak dates. In Canada, six out of ten Airbnb guests reside in the country itself.