New York City versus airbnb
Airbnb may be pretty much finished in New York City:
New rules governing short-term stays book via Airbnb, Vrbo and similar platforms in New York City could have broader consequences for the vacation rental industry, just as it faces headwinds from some travelers who are once again favoring traditional hotels over residential-style listings.
Why it matters: The change — which Airbnb has called a “de facto ban” — is one of the most significant moves a major city has made in recent years to curtail short-term rentals, coming after New Orleans issued new restrictions of its own in March.
A lot of cities might end up doing the same thing as New York, which is basically to limit airbnb-type listings of under thirty days to properties in which the owner is present, the number of guests is limited to two, and the guests have access to the whole property. Only a small percentage of listings are of that type.
I wonder if this is being done to protect the hotel industry; that certainly is the argument of the pro-airbnb folks. But I am also under the impression that there are so many airbnb properties in a city like New York that it’s making it harder for bona fide residents to rent an apartment, and probably driving up prices as well.
One of the many problems is that hotel rooms in general, and particularly in a city like New York, have become exorbitant in recent years. That’s my perception, when a basic room costs at least $350 a night.
Will the limitations on airbnbs discourage tourism? No one seems to know. Probably many of you don’t much care about New York, but this sort of thing could spread to many many cities.
There are moves afoot in Australia to accomplish a similar goal. Lots of news about a “crisis” in housing supply and affordability. Soon to be made much worse by unfettered immigration.
“it’s making it harder for bona fide residents to rent an apartment, and probably driving up prices as well.” This is the usual argument.
So the easy Marxist solution is to make multiple property owners the bad guys and tax, legislate, or outright seize the short-term rental property into non-existence or government ownership.
I have a certain amount of sympathy for AirBNB in this matter. I also remember that after Jan 6th, they banned people who law enforcement said were “involved” in the Jan 6th riot or are “hate” groups. So I have less than I might have.
Hope AirBNB realizes that just because you cooperate with the ruling class at one moment, they can easily turn on you the next.
This is a pesky problem and I can see both sides of the argument. I own a small-ish hotel plus restaurant in Vermont and my resort town has been overrun by AirBnBs in the past ten years or so. A lot of fellow hospitality people complained about it, but for the most point I’ve stuck to my libertarian inclinations and just forced myself to be smarter about this new kid in town. One thing we did some five years ago is put all of our rooms on AirBnB when that platform started partnering with hotels. Then COVID hit and AirBnB became our single biggest (!) booking driver. It was as if all those people who wouldn’t feel comfortable in a hotel due to the virus were fine with booking our rooms as long as they were able to do it via AirBnB. It made zero sense whatsoever. In any event, all short-term rentals did for my little town and its hotels is to grow the pie and everybody seemed to benefit. I know my restaurant has been full most nights after we bounced back from COVID.
However, there did turn out to be a serious catch. The biggest, as you point out, is a dramatic housing shortage. Well nigh every home that’s sold in our area these days becomes an AirBnB. It drives up prices and takes inventory away from the regular rental market. My house, which I bought in 2017 for $350,000, is now easily worth double that. Two-bedroom condos in 50-year-old tear-down buildings are going for $300,000. It’s absolutely ridiculous. To be sure, not all of that is the fault of AirBnB — demand has been up in most rural areas due to the pandemic — but short-term rentals sure haven’t helped. The average Joe and his wife making a combined $100,000 in annual income can practically forget living where I live, and it’s changed the demographic make-up of the area significantly while at the same time clogging all the roads almost daily.
I know that the hotel lobby has objected vehemently against short-term rentals, which I guess makes me slightly suspect now you’ve read the above. But imagine building a hotel in New York City and having to deal with the zoning board, fire marshall, health inspector, and a host of others there. You’ll spend $400,000 on permit fees for your $20,000,000 building before you’ve even put a shovel in the ground. Twenty percent of your total building costs will be spent on code compliance including ADA, emergency exits, firewalls, etc. The bank will give you a mortgage for 20 years, 5 of which fixed at an interest rate .75% higher than a residential loan. Now comes Sally next door. She buys up a small apartment, gets a 30-year residential mortgage, complies with not a single regulation, has no overhead, no permit fees, and no health inspections. She gives the place a paint job with her boyfriend and starts renting the hell out of it, undercutting every hotel in town. But at the same time, she is driving folks looking for a house out of the market. Call it what you will, but a level playing field it ain’t, and a “victimless crime” it ain’t either.
All this said, I think this cat is out of the bag. Perhaps New York City can afford to hire an army of code enforcers to go after offenders (and they probably will). My little town won’t have that luxury, so whatever policy it would enact would just remain unenforced. I’m not too worried about it myself from a business perspective. But it’s clear that it’s had major consequences for many involved, and not all of them positive. By the way, we’re at the point where it looks like the bubble may be about to pop. There are clear signs of over-saturation of the market where I live. We’ll have to see where that goes and if it will have consequences of its own. Maybe it’s a good thing, even if painful to many homeowners.
Wait, there are actually people who want to go to New York the way it is now?
Its all in preparation for the announcement that all NYC AirBnBs will be forced to house the illegal invaders that Texas is so helpfully sending on to America’s greatest east coast sanctuary city.
It is without a doubt another regulation to sluice income to the politically connected.
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If New York City wants more apartments for rent, one thing it might do is adopt a plan to eliminate rent control: limiting succession to rent controlled and ‘rent stabilized’ units to spouses and disabled children of the original tenant, converting all ‘rent controlled’ to ‘rent stabilized’ units, allowing the rent on ‘rent stabilized’ units to increase pari passu with nominal personal income per capita in the 19 counties of greater New York, ending rent regulations on apartments voluntarily vacated, providing in law for landlords to purchase a tenant’s right to a regulated rent by providing a negotiated lump sum registered at the city clerk’s office (which would then allow the landlord to rent it at market rates in perpetuity), prohibiting an extension of regulated rents to any dwellings which did not have them at a certain date, streamlining eviction procedures, auctioning off all public housing, and reducing the capacity of professional complainers to prevent new developments from being constructed.
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You want to get radical, you might scrap anti-discrimination law applicable to real estate transactions. Provided they respect the terms of leases and leases are composed in accordance with templates provided in state real estate law, let landlords rent to whomever they care to and refuse to rent to whomever does not strike their fancy. That would require state legislation.
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Its all in preparation for the announcement that all NYC AirBnBs will be forced to house the illegal invaders that Texas is so helpfully sending on to America’s greatest east coast sanctuary city.
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Good surmise.
I should think that there is a place for both. AirBNBs have their appeal. My daughter, who seems to travel extensively, uses them almost exclusively. She just returned from the World Cup in Australia and gushed over her BnB, as well the hospitality, and charm in Sydney.
Certainly, on the occasions when a family group gathers, such as our 65th wedding anniversary, or my grandson running in a distant marathon, the AirBNB has its appeal.
On the other hand, someone has to do actual work to make it worthwhile; as in meal planning and so forth.
So, hotels that provide full services, as BnBs don’t, have a varied clientele available..
This issue seems similar to Gruesmome Newsom and company’s, efforts to kill Uber and Lyft. I guess it was cheaper to buy a few politicos than for the taxi companies to compete.
I have a 5 bedroom house in a beautiful area of Hawaii with no hotels. Kids grown and gone. I rent 2 of them out on AirBnB. Keeps my head above water as a retiree. I have many friends doing the same thing. Cost of living here is astronomical and keeps going up every year. This is how we hang on to the family home.
Also, I love my guests! I show them genuine Hawaiian Aloha and have made friends from all over the world.
City and County is trying to shut us down and yes it is all about paying off the hotel industry.
Having said this, I do favor limiting the ‘home hosting’ privilege to owner occupants. I have seen tight neighborhoods ruined by short term rental houses.
One thing I can say about how the travel industry has changed. I rent my entire house out for a month or two a year while we visit our kids and grand kids on the Mainland. These rentals are invariably to multi generation families. Usually grandparents picking up the tab and treating kids and grandkids. These groups will never stay in a hotel. NEVER. Imagine trying to find tables for a group like that for 3 meals a day! They want kitchen facilities and common spaces to share time together.
Most of the negatives associated with AirBnB rentals in ‘non resort areas’ can be eliminated by limiting them to owner occupants who have to answer to the neighbors they live amongst.
I don’t know if this is part of the reasoning for NYC’s move, but I have seen problems with groups of “young people” renting an AirBnB for house parties, with said party drawing very large crowds and causing enough ruckus that multiple police officers are needed in response.
Two such house parties in my Texas college town have resulted in shootings.
Dave L.: Yes, this is certainly a problem. Not as much in rural areas perhaps (though I have at least one friend with an “AirBnB party house” next door). The other, related thing I left unmentioned in my long rant above is the fact that in most cities in Europe, but I’m sure also Boston, NYC, Chicago, etc., developers buy up entire apartment blocks, one unit at a time if necessary, and put them on the short-term rental market. This means that entire buildings now become de facto hotels, smack in the middle of residential neighborhoods. I’ve read stories about Amsterdam in which that city’s residents were explaining that they have to dodge puking Brits all the time on their way to their car at 6AM, far from any bar or “coffee shop”. Now that’ll be great for local resale values.
I’m not sure when it became a conservative viewpoint to just let it all rip, consequences be damned. I thought we advocated for ordered liberty and the rule of law. We have zoning laws for a reason, even if that sometimes means that the strong fist of government comes down on us occasionally. As long as it’s not coming from the state capital or (even worse) D.C. we have plenty of opportunities to become advocates and influence policy on a local level. That’s how our small-r republican system is supposed to work.
Again, my business and I are not hurting from AirBnBs (the opposite, in fact), but there’s certainly another side to the “powerful lobbies killing off small property owners” narrative.
We have zoning laws for a reason,
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We have zoning laws to address externalities. That someone owns and occupies a space, someone else rents a space for periods longer than a month, and someone rents a space at a nightly rate is not per se an externality. The externality is derived from nuisance problems which arrive from people coming and going and from the distinction between residential and commercial uses. Your community may be dealing with an eccentric problem because it’s a resort locus. The share of a typical state’s population who live in resort loci is generally somewhere in the low single digits.
but there’s certainly another side to the “powerful lobbies killing off small property owners” narrative.
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It’s New York City, home of the taxi medallion. There likely isn’t another side to the story as it unfolds there.
I don’t know if this is part of the reasoning for NYC’s move, but I have seen problems with groups of “young people” renting an AirBnB for house parties, with said party drawing very large crowds and causing enough ruckus that multiple police officers are needed in response.
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a. Allow owners plenary discretion to whom they rent. No ‘open housing law’.
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b. consider some adjustments in tort law and insurance law so the bar and the insurance companies can put the screws to people who are not minding the store.
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c.Another solution might to be to have municipal ordinances which limit the number of people on an Air BnB premises and empower the police to shut down gatherings and arrest everyone they see.
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The regulatory function of municipal government shouldn’t be all that extensive but should cover (1) the use of common property, (2) land use, and (3) nuisance abatement.
I live in a condo complex where most of the units are rented out. Someone who purchased a unit last year made it an AirBNB rental. When the place was rented out, it became a nuisance for other residents, as the AirBNB rental people took up parking spaces that we residents ordinarily used. They could have parked in the far parking lot, which has a lot of empty spaces, but I doubt the unit owner ever presented that option to the AirBNB renters. They wouldn’t have liked the 200 yard walk to their unit.
Had the AirBNB rental continued, the HOA may have changed the parking rules from unassigned parking to assigning parking. Then homeowners could have rented out parking spaces to the AirBNB rental.
In any event, the city government decided that the AirBNB rental had violated some city regulations, and the unit turned into a regular long-term rental. There are AirBNB rentals throughout the city, so the issue wasn’t that AirBNB rental was prohibited outright, but that the owner of the AirBNB rental unit hadn’t followed protocol in setting up the AirBNB rental.
There have been incidents of some AirBNB rental units in the city being turned into loud party venues, which doesn’t go over well with neighbors.
Art Deco: To be sure, zoning laws were also established to address other issues than just “externalities”, namely to maintain a certain ratio between residential and commercial use within a community (or within certain areas of a community). I built a huge expansion to my hotel a few years back and the neighbors were, understandably, not too thrilled about it. But they bought their house in a residential neighborhood which abuts a commercial district, so tough luck. But that’s a little different from an investor buying up a huge apartment block in a quiet residential city neighborhood and turning it into party city.
The Right is always quick to point to the fact that we should deregulate the rental market, build more housing, and make it more attractive for businesses including hotels to build and operate. Well, good luck with that in NYC. I agree with you that city is hardly the epitome of conservative rule, to put it mildly. But at the same time there are still good folks trying to live quietly without being overrun by tourists all the time, or looking for homes there which have now become unaffordable because a large chunk of the housing stock has been turned into de facto hotels. And regardless, some levels of (local!) regulation will always be necessary in order to house so many people and business on so little space. It’s a different story in North Dakota obviously.
NYC is dying at Democratic hands. I will never return. “Migrants” are being housed in hotels at NYC city expense. Mayoe Adams fusses at TX bussing volunteers to NYC. But he says nothing against Biden and the non-Southern border letting the dreck in. Democrats! A NYC resident pays the highest tax rates total in the nation, and they will go up to “care for” the costs of care for the migrants. unless Biden sends Adams the billions he needs, in which case we will ALL be paying to house illegals in NYC hotels.
I respect the concern about turning a tourism location into purely rental houses and driving out residents. I do think that should be avoided if possible.
But anecdotally, traveling with young kids is infinitely easier if we can rent a small house for a week, with a kitchen to warm up bottles, a dining room table for family dinners, etc. This is a demo that is underserved by the hotel industry, which won’t ever be able to replicate the ease of vacationing when you are able to rent not just a bedroom, but eating and living spaces also.
Art Deco: To be sure, zoning laws were also established to address other issues than just “externalities”, namely to maintain a certain ratio between residential and commercial use within a community (or within certain areas of a community).
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The externalities in question are noise, strangers, garish commercial signs, and, in some zones, unsightly acres of asphalt.
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But that’s a little different from an investor buying up a huge apartment block in a quiet residential city neighborhood and turning it into party city.
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The externalities in question are noise and strangers (especially their parked cars).
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But at the same time there are still good folks trying to live quietly without being overrun by tourists all the time, or looking for homes there which have now become unaffordable because a large chunk of the housing stock has been turned into de facto hotels.
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Last time I checked some data from the Department of Transportation, it appeared to me that about 2.5% of the population is engaged in out-of-town travel on any given day. I don’t think pressure from a fraction of this population is making housing ‘unaffordable’ except in the oddest sort of location. The counties around New York have about 18 million people living in them; it’s not a resort town on Lake Champlain.
Kshoosh: Completely agree, and I do the same with my family.
Art Deco: With all due respect, I think you’re severely underestimating the problem. But we can agree to disagree.
Airbnb’s for higher occupancy when Covid shut down overseas travel.
Airbnb / short term rentals give 2x or more cash flow of a long term rental. This means the owner can afford to pay more, increasing prices.
In some markets, Phoenix, the Airbnb bubble is popping. To much supply, not enough demand.
My random thoughts on AirBnB and VRBO and the like:
I despise AirBnB but I also think New York passes a lot of stupid laws. This one has me wondering. AirBnB has been a considerable factor in driving up prices and driving out actual residents in many areas. Houses get purchased by speculators, and/or, owners of long-term rental properties refuse to renew leases so they can convert them to short-term rentals.
As I said, I despise AirBnB. I have been trying to move to a particular city but it is overrun with AirBnB.
1. Californians flee California, don’t want to pay capital gains tax on the money they get from selling their overpriced house in California, move to said destination, and buy three houses, renting out two on AirBnB.
2. Elderly relatives die, and rather than selling the house, the beneficiaries, rent them out on AirBnB.
3. But the residential areas near downtown is SUPER-SATURATED with AirBnBs and VRBOs.
4. Long-term house rentals have all but disappeared because the property owners have switched them over to short-term AirBnB-type properties.
5. Property values have become so highly inflated that outside the Californians, people no longer speculate on buying a house to rent out on AirBnB.
Even where I currently live, people have been buying MULTIPLE beach homes — to rent out on AirBnB. That helps drive up the costs to taxpayers when a hurricane wipes it out — property values go up, plus, all the whining about “lost income” from the properties. Back when, those houses belonged to a single family, and there was no “lost income.”
The cost of renting an AirBnB has gone up to the point where they are getting to be on par with hotels. (This is a good thing.)
Actual real hotels offer daily maid service, you don’t have to empty your own trash, frequently offer continental breakfasts. None of which you get with an AirBnB.
You want a kitchen? The “suites’ hotels have pretty nice kitchen setups. And you get daily maid service and you don’t have to empty your own trash! My husband and I stayed in one that slept up to five. Plus there was a connecting door, so two suites could be rented and sleep up to ten. It was a pretty nice setup! (It was downtown in a fairly large city, so really good space for the price.) And there was a bar, swimming pool, and gym downstairs. This one was also “pet-friendly” and had a dog-walking area with poop station.
My husband and I also stayed in a development that was almost all AirBnBs. It was weird. There were hardly any people there. We decided on the next trip, we would stay in a hotel. It was kind of creepy with no people around.
I suspect but haven’t looked into it deeply, that in a lot of jurisdictions, AirBnBs aren’t on the receiving end of the regulations that commercial hotels are, and/or to the extent that commercial hotels are.
I like the idea of limiting Airbnb-type listings of under thirty days to properties in which the owner is present, the number of guests is limited to two, and the guests have access to the whole property, but the libertarian in me doesn’t. I think there may be another way to do it.
Lee: Great comment. I’m very conflicted about it too. I don’t mind staying in AirBnBs personally. Regardless, dismissing the problem altogether and pretending the pushback is coming solely from hospitality lobby groups is clearly an insufficient response.