New rules have finally driven Airbnb out of the city. What will happen next?
Airbnb has ended its service in New York City. This is something New Yorkers have heard many times, but there’s reason to believe that this time, it’s finally true.
Last month, if you searched the platform for Brooklyn real estate listings, you’d get a solid array of options, as shown above. A similar search last Tuesday, when a new law went into effect, turned up an even blanker map.
Few people thought this day would actually come. For many years, the company, the courts, activists and politicians have been fighting over how to manage short-term rentals in the city. Thousands of neighbors have complained about disrespect for guests who bring noise, trash and even weapons into the neighborhood. Many guests ripped off a terrible host, because he put them in cupboards and in rooms inside restaurants. To be sure, many affordable housing advocates have complained that investors hoarding short-term rentals are making it difficult for local residents to find affordable rent. There have to be consequences for turning nearly a third of homes in some parts of Brooklyn’s vibrant, traditionally black Bed-Stuy neighborhood into a staging ground for IKEA furniture, right?
But little has changed. Real estate websites continued to remind investors that “Airbnb Arbitrage,” meaning renting an apartment for the sole purpose of publishing it on Airbnb, is legal. Sometimes a major exploiter of the system is prosecuted.
However, on the whole, if you want to list something on Airbnb, regardless of whether you’re a real estate mogul or a broke renter, you probably can. And if you want to find an Airbnb — no matter how small or large your group is, and how short or long your stay — you’ll find plenty of options. In 2019, before the pandemic cut the number in half, there were about 50,000 offers. Thousands were technically violating state law, but the rules were enforced so sporadically that few knew it.
“It was always a forgotten place,” longtime host Evelyn Badia told me. “Until now,” she said.
Last week, Airbnb’s free-for-all service ended. Local Law No. 18, passed in January 2022 and went into effect last Tuesday, makes renting a private apartment or home via Airbnb not only illegal, in most cases, but potentially difficult to enforce. The new rules only permit short-term rentals in approved homes where hosts are located, a major departure from the way most people use Airbnb — or VRBO, which faces the same restrictions. The new registration system promises to make booking guests on illegal listings more difficult.
It’s so extreme that Badia decided to sell the house she’d been using on Airbnb for over a decade and move to Puerto Rico. Maybe she’s not alone. One month ago, there were about 22,000 short-term listings on Airbnb in New York City. As of this week, there were fewer than 7,000 homes according to Inside Airbnb, a data-focused housing advocacy organization.
It is natural for people to find alternative solutions. Many hosts left the platform. And more of them converted their listings to 30-day stays, a category that doesn’t require registration, according to AirDNA, a company that analyzes Airbnb data. But affordable housing advocate Murray Cox, founder of Inside Airbnb, is convinced this will still do what previous measures didn’t: force Airbnb and VRBO to actually convince (most) hosts to follow the law.
“It’s not just about corrupt things, it’s about these individual hosts taking an entire apartment off the rental market,” Cox said.
Many different groups are now fighting over the usefulness of this new rule. What is undeniable is that it will have a major impact on housing and tourism in New York City. Here’s how you could change things:
It will discourage some investors from overpaying for homes
In recent years, it’s been easier for investors to outbid other buyers because they know they’ll make up that money by Airbnbing, Yvette Guzman, a New York-based real estate agent with REbuild Real Estate, explained to me. Airbnbing will typically produce about three times more than a rent for a long-term renter, she said.
The new rules make it illegal to use Airbnb for most homes and apartments for less than 30 days. This means that it is still possible for an investor to buy dozens of apartments through Airbnb, but having guests for 30 days is not at all guaranteed. Already, Guzman says she sees investors refocusing on upstate towns with more lax Airbnb rules.
It will encourage landlords to rent units to long-term tenants and… leave New York City.
Activists like Cox hope that more landlords — no longer tempted by Airbnb — will list properties for long-term renters. It’s hard to predict how often this will happen, and there are reasons other than income that might make it more attractive to use Airbnb for your homes instead of renting them. One of these things is a virtual guarantee that they will pay.
“Do you know how many people are practically bankrupted by squatters?!” said Lisa Grossman, co-founder of Restore Homeowners Autonomy and Rights, also known as RHOAR, an organization fighting for changes to the new law. In fact, most tenants do not need expensive attorneys. But it is true that a growing number of New Yorkers have recently fallen behind on their rent. Even if the risks are minimal, that perception will influence the decisions made by realtors like Grossman.
For others, like Badia, even if a renter pays for a long time — she prefers the higher amount and increased flexibility that came with Airbnbing her vacant unit in Park Slope, Brooklyn. For a while, she was also renting out her own unit as shared accommodation, which is the only scenario she can now sign up for. (Because she’s dealing with cancer, this is no longer appealing.) It plans to focus on Airbnbing in Puerto Rico and Georgia, where laws are more favorable.
She believes rules are needed to prevent investors from exploiting the system. She also resents developers who demolished nearby homes like hers and turned them into luxury apartments. “God forbid you try to hold on to your house,” she said to me angrily.
This won’t lower rents across New York City, but it may stabilize them in some neighborhoods
Rent prices in New York City are currently about 20 percent higher than they were at the beginning of the pandemic, according to Chris Salviati, chief economist at Apartment List. For example, the average rent for a newly listed one-bedroom apartment in Manhattan is $3,184, up from $2,643 in March 2020.
Unfortunately, neither he nor any other housing expert I spoke to believed the new law would lower those numbers. One reason is that short-term rentals represent a fairly small percentage of New York City’s three million housing units. Salviati believes there are perhaps 11,000 listings that could potentially convert For long-term rentals under the new rules. That’s less than half of the 26,000 new units built last year in New York City. However, the shift could quickly deregulate housing — and potentially lower prices — in some neighborhoods, such as Brooklyn’s brownstone-heavy Bed-Stuy, which had 15% of short-term Airbnbs in all of New York City according to Gothamist. . On the other hand: Getting an Airbnb for 30 days should be easier than it has been for years.
The changes will push tourists into hotels and other sublease systems
In order for hosts to be registered by the Special Enforcement Sheriff’s Office, they must not only prove that they live in the specific unit they are renting, but they must also commit to being Present when their guest is there. That’s what it’s intended for — and it’s likely to work to address the desire of guests to rent Airbnb to eliminate the desire of mobs and profiteers to hoard rentals.
This rule also eliminates the possibility of anyone being able to make a little money by renting out their apartment or house for less than 30 days, unless they are willing to have a roommate. The hosts are not satisfied with this.
“I’m not registering to have someone live in my house with me; I’m 60 years old,” RHOAR’s Grossman, who lives in Manhattan’s Hell’s Kitchen neighborhood, told me. Her organization is fighting to have one- or two-family homes exempt from the new rules. (Inside’s Cox Airbnb, which played a role in writing the law and who has never stayed at an Airbnb to begin with, is unsympathetic. “Such a change would allow more than 800,000 housing units to be available through Airbnb, making them less likely to get them,” he told me. These will become long-term rentals.) Most guests don’t want to hang out in their pajamas with a stranger either.And even if guests are willing, a maximum of two guests is allowed.
This is all good for hotels. But the possibility of absorbing all this work seems unlikely. Because let’s be real. Airbnb has long been working to fill gaps, beyond high-design tourism. Even if you hated the corporate aspects, you were grateful that your parents were able to rent a place near your small apartment so they could see their grandchild easily. When the creepy fumes filled your apartment, it was comforting to know that you could quickly find their grandchild. nearby place.
So what we are likely to see is an expansion of informal subleasing systems. This will bring back negotiations over money and cleaning for guests and hosts. Its founder, Stephanie Diamond, has long resented Airbnb-style “price gouging” and has directed her team to reject expensive rentals. But she is still not optimistic that the new law will lead to a significant drop in prices. She has no doubt that “this will change the dynamics of the city,” but “New York City was very expensive before Airbnb,” too, she says. He said.