By: Eleni Tsokolas
When was the last time you booked a hotel over an Airbnb? For those frequenting New York City, the answer to that question will be far less often than most since the city’s “de-facto ban on Airbnb” was implemented on September 5, 2023. The recent regulation, Local Law 18, mandates that hosts of rental units from common online rental applications being used for less than 30 days be registered with the Mayor’s Office of Special Enforcement (or have class B status). Additionally, owners may not rent out an entire apartment unit or home, hosts need to be present during their guests stay and guests must have unobstructed access to every room. Digital booking platforms like Airbnb, VRBO, and Booking.com could be fined up to $5,000 for processing payments from unregistered transactions. Those who have booked a short-term rental with a check-in date prior to December 1st, 2023 can rest assured their reservations will not be cancelled though, as the city is attempting to minimize the immediacy of this new legislation’s impact.
As the dominating force in the market, list-it-yourself digital platform Airbnb has essentially become synonymous with short-term rentals and makes up almost a third of active city listings in New York City. However, the number of available Airbnb’s has plummeted around 70% from August 5 to September 5, although long-term rental listings have skyrocketed about 200%. RHOAR, a coalition of homeowners, has expressed their frustrations with Local Law 18, claiming that it deters tourists and diminishes secondary income which residents have become reliant on. Local Law 18 is not novel though, seeing as in effect illegal hotels (spaces without hosts present during the stay) have been prohibited since 2011. Rather, Local Law 18 serves as an enforcement mechanism to that initial law banning in effect hotels which landlords and homeowners alike have been seemingly oblivious to. Contrary to RHOAR, The Coalition Against Illegal Hotels has been advocating for over a decade for the city to crack down on the industry in an effort to help absolve the affordable housing crisis in New York.
This raises the question of whether zombie urbanism and the “hotelization” of apartment units via platforms like Airbnb have been shifting the market in such a way that reduces not only the affordability of units, but the availability of units as well as the corresponding gentrification of historically BIPOC neighborhoods. As to affordability, there are conflicting reports. An AirDNA study attributed only 1-4% of housing price increases to short-term rentals, meanwhile, a study done by the National Bureau of Economic Research, the University of Southern California, and California State University have demonstrated that “a 10% increase in Airbnb listing leads to a 0.42% increase in rents and a 0.76% increase in house prices.” This calculation, in tandem with the 800% increase in short-term rentals since 2011, would result in a 33.6% rent increase during that time. Availability of housing is even more unclear, with some data estimating around 90,000 units being vacant, some estimating less than 40,000 units as vacant.
In the abstract, the profit margins on short-term rentals are considerably more lucrative than those of traditional leases, which incentivizes landlords and homeowners to capitalize on that potential through Airbnb listings. The natural consequence of this is a reduction the availability of units for long-term rentals, especially in cities where there’s a smaller share of owner-occupiers such as New York. Generally, tourists are more inclined to stay in central locations such as Manhattan, which Airbnb states more than half of their listings are, thereby minimizing the supply of available housing for locals seeking residence in these areas. Inevitably, those locals are then forced into apartment hunting in neighborhoods not frequented as heavily by tourists. These areas are often comprised of communities of color who are subsequently displaced, which then changes the very fabric of the neighborhood itself in such a way that it becomes a newly commodifiable area that attracts tourists and short-term residents more, which then facilitates the cycle of gentrification. Brooklyn is a primary example of this in New York, as a historically black borough whose demographic has shifted drastically within the past few decades. In 2000, Bedford Stuyvesant was comprised of almost 75% black residents as compared to a mere 40% in 2021. The percentage of white residents in that same time period went from 2% up to nearly 33%. The median rent in 2000 was $900, whereas in 2021 it was roughly $1,900. Furthermore, 37% of Airbnb listings in New York are in Brooklyn, illustrating the way demographic shifts in this borough have made this area a tourist attraction. These statistics are all demonstrative of how susceptible communities of color in particular are to displacement with the affordable housing crisis soaring and the advent of short-term rentals dominating the market like Airbnb.
Landlords and homeowners may feel somewhat burdened by Local Law 18 due to the declining return on investment of their properties, especially those reliant on Airbnb for secondary income. Those who have become dependent upon renting their units overlook the inherent privilege of homeownership and neglect the impact the short-term rental market has on the gentrification of communities of color in the city, who suffer the detrimental impacts of housing crises far more than other demographics. While banning Airbnb may not entirely eradicate the affordable housing crisis and housing scarcity issues, it serves as a safeguard against the commodification of these communities of locals just for the sake of tourism.
Student Bio: Eleni is a second-year law at Suffolk University Law School. She is a staff member for the Journal of High Technology Law. Eleni received a Bachelor of Arts degree in philosophy, classical studies, public law and political thought from DePaul University in 2022.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
