Airbnb in New York City is over. This is something that New Yorkers have heard many times, but there’s reason to think that this time, it’s finally true.
Last month, if you’d searched the platform for listings in Brooklyn, you’d have gotten a robust array of options, as seen above. A similar search last Tuesday, when a new law went into effect, produced the much emptier map.
Few thought this day would actually come. For years, the company, courts, activists, and politicians have been battling over how to manage short-term rentals in the city. Thousands of residents have complained about disrespectful guests who bring noise, trash, and even guns to the neighborhood. Many a guest has ripped apart a terrible host for sticking them in cupboards and in rooms within restaurants. And certainly many an affordable-housing advocate has complained of investors hoarding short-term rentals and making it harder for locals to find reasonable rent. There should be consequences for converting nearly a third of the homes in some parts of Bed-Stuy, a vibrant, traditionally Black neighborhood in Brooklyn, to staging grounds for Ikea furniture, shouldn’t there?
But little changed. Real estate sites continued to remind investors that “Airbnb arbitrage,” the act of leasing an apartment for the sole purpose of posting it on Airbnb, was legal. Occasionally, a major system exploiter would get sued.
Still, by and large, if you wanted to list something on Airbnb, regardless of whether you were a real estate mogul or a broke renter, you probably could. And if you wanted to find an Airbnb—no matter how small or large your group, how short or long your stay—you’d find lots of options. In 2019, before the pandemic halved the number, there were around 50,000 offerings. Thousands technically violated a state law, but rules were so erratically enforced that few even knew this.
“It’s always been a limbo space,” Evelyn Badia, a long-term host, told me. “Until now.”
Last week, the Airbnb free-for-all ended. Local Law 18, which passed in January 2022 and went into effect last Tuesday, makes renting out a private apartment or home on Airbnb not only illegal in most cases but, perhaps more relevantly, difficult to pull off. The new rules sanction short-term rentals only in approved homes where hosts are present, a significant departure from how most people use Airbnb—or VRBO, which is facing the same restrictions. A new registration system promises to make it more difficult to book guests in illegal listings.
It’s so extreme that Badia has decided to sell the home she has listed on Airbnb for more than a decade and relocate to Puerto Rico. She’s probably not alone. One month ago, there were around 22,000 short-term listings on Airbnb in New York City. As of this week, there are fewer than 7,000, according to Inside Airbnb, a data-focused housing advocacy organization.
Naturally, people will find workarounds. Many hosts left the platform. Even more converted their listings to 30-day stays, a category that does not require registration, according to AirDNA, a company that analyzes Airbnb data. But affordable-housing advocate Murray Cox, the founder of Inside Airbnb, is convinced this is still going to do what previous measures have not: force Airbnb and VRBO to actually get (most) hosts to follow the law.
“It’s not just about the bad apples. It’s about these individual hosts taking an entire apartment off the rental market,” said Cox.
Many different groups are now fighting over how helpful this new rule will be. What’s undeniable is that it will have a major impact on housing and tourism in New York City. Here’s how it could change things.
It Will Dissuade Some Investors From Overpaying for Homes
In recent years, it has been easy for investors to rationalize outbidding other buyers because they knew they’d make up that money by Airbnb’ing the spot, Ivette Guzman, a New York–based real estate agent with Rebuild Real Estate, explained to me. Typically, Airbnb’ing would produce around three times more than renting to a long-term tenant, she said.
The new rules make it illegal to Airbnb most homes and apartments for less than 30 days. That means it’s still possible for an investor to Airbnb dozens of apartments, but getting 30-day guests is far from assured. Already, Guzman says, she is seeing investors refocus on towns upstate with more-lax Airbnb rules.
It Will Encourage Landlords to Rent Units to Long-Term Tenants and … to Leave New York City
The hope of activists like Cox is that more landlords—no longer tempted by Airbnb—will list properties for long-term renters. It’s difficult to predict how often this will be the case; there are reasons beyond income that make it appealing to Airbnb a house instead of leasing it. One of those is a virtual guarantee that guests will pay.
“You know how many people have been practically bankrupt by squatters?” said Lisa Grossman, the co-founder of Restore Homeowner Autonomy and Rights, an organization fighting for tweaks to the new law. In reality, most tenants do not require costly lawyers. But it’s true that a growing number of New Yorkers have recently fallen behind on rent. Even if the risk is minimal, this perception will affect decisions that landlords like Grossman make.
For others, like Badia, even if a long-term renter pays, she prefers the higher sum and increased flexibility that came with Airbnb’ing her vacant unit in Park Slope, Brooklyn. For a while, she was also renting out her own unit as a shared stay, the only scenario she could now get registered for. (Because she is navigating cancer, this is no longer appealing. But renting the shared unit is not enough money regardless, she said.) She’s planning to focus on Airbnb’ing in Puerto Rico and in Georgia, where the laws are more accommodating.
She believes that rules were needed to limit investors from exploiting the system. She also resents the developers who tore down nearby homes like hers and turned them into luxury apartments. “God forbid you try to hold on to your house,” she told me, exasperated.
It Won’t Reduce Rents Across New York City—but It Could Stabilize Them in Some Neighborhoods
The city’s rent prices are currently nearly 20 percent higher than they were at the start of the pandemic, according to Chris Salviati, a senior economist at Apartment List. The median rent for a newly listed one-bedroom apartment in Manhattan, for example, is $3,184, up from $2,643 in March 2020.
Alas, neither he nor any other housing expert I spoke to thought that the new law would bring down these figures. One reason is that short-term rentals are a fairly small percentage of the 3 million or so New York City housing units. Salviati believes there are perhaps 11,000 listings that are likely to be converted to long-term rentals under the new rules. That’s less than half the 26,000 new units constructed last year in the city. That said, the shift could rapidly free up housing—and perhaps lower prices—in some neighborhoods, like the brownstone-filled Bed-Stuy, which, according to Gothamist, had 15 percent of the entire city’s short-term Airbnbs. On a different note: It should be easier to get a 30-day Airbnb than it has in years.
The Changes Will Drive Tourists to Hotels and Other Subletting Systems
In order for hosts to get registered by the Mayor’s Office of Special Enforcement, they must not only prove that they live in the specific unit that they are renting, but also commit to being present when their guest is there. This is intended—and will likely succeed in counteracting guests’ desire to rent Airbnb to throw ragers and profiteers’ desire to hoard rentals.
This rule also kills the possibility that anyone can make a little cash renting their apartment or home for less than 30 days, unless they are willing to essentially have a roommate. Hosts are not pleased about this.
“I’m not registering to have someone live in my home with me; I’m 60 years old,” Grossman, who lives in the Hell’s Kitchen neighborhood of Manhattan, told me. Her organization is fighting to make one- and two-family homes exempt from the new rules. (Cox of Inside Airbnb, who played a role in writing the law and who, on principle, has never stayed in an Airbnb, is unsympathetic. Such a change would allow more than 800,000 housing units to be Airbnb’ed, decreasing the likelihood that they’d become long-term rentals, he told me.) Most guests do not want to hang out in our pajamas with a stranger either. And even if guests were willing to, a maximum of two guests is permitted.
All of this is good for hotels. But the likelihood that they will suck up all this business seems unlikely. Because, let’s be real, Airbnb has long been filling gaps beyond high-design tourism. Even if you abhorred aspects of the company, you were grateful that your parents could rent a place nearby your tiny apartment so they could easily see their grandchild. When scary fumes filled your place, it was a relief to know that you could quickly find a nearby spot.
And so what we’re likely to see is the expansion of more informal systems of subletting. This will return negotiations about money and cleaning to guests and hosts. Listings Project, a classified newsletter featuring sublets in New York City, Los Angeles, and other creative hubs, is one of the systems that seems poised to grow. Its founder, Stephanie Diamond, has long resented Airbnb-style “price gouging,” and directs her team to reject overpriced rentals. Still, she’s not optimistic that the new law will significantly drive down prices. She has no doubt that “it will change the dynamics of the city,” but “NYC was way expensive before Airbnb” too, she said.
