Beyond Short-Term Rentals: The Deep Roots of the Housing Shortage
The persistent unaffordability of housing in New York City is not a problem that can be solved by regulating a single market segment. The issue is far more complex, rooted in decades of underbuilding and fundamental economic dynamics.
The Enduring Supply-Demand Chasm
Experts across the board agree that the primary driver of New York City’s housing affordability crisis is a structural imbalance between immense demand and a chronically slow pace of new housing construction. For decades, the city has not built enough homes to keep pace with population growth and job creation. This deficit means that even substantial shifts in one sector, like short-term rentals, have a minimal impact on the overall market dynamics.
While there are signs of a potential rebound in new construction permits being filed, the actual impact on housing supply will take years to materialize. In Q2 2025, new building filings saw a significant increase of 43% year-over-year, signaling renewed developer interest, partly due to new tax incentives like the 485-x program. However, most of these projects are capped at 99 units to avoid stricter labor requirements, and the city still has a long way to go to meet its ambitious housing goals. [cite: 2 (housing engine)]. Find out more about New York Airbnb crackdown housing supply impact.
The Modest Share of Short-Term Rentals
Even at its peak, the inventory of short-term rental units in New York City represented a relatively small fraction of the total housing stock – less than 4% of over one million market-rate apartments. Academic studies consistently show that the citywide effect of short-term rentals on rents is modest unless they constitute a very large portion of available units. In NYC’s vast market, tens of thousands of units represent a minor perturbation, not the root cause of the crisis.
A Web of Broader Influences
Several other significant factors contribute to the elevated cost of housing. High mortgage rates increase the carrying costs for homeowners and landlords, which are often passed on to renters. Furthermore, past regulatory changes, such as the 2019 rent law reforms, have been cited by some as reducing the economic incentives for landlords to renovate vacant apartments, potentially leading to fewer units being brought back into active use. The cost of construction materials and labor also plays a substantial role, impacting the feasibility of new development.. Find out more about NYC short term rental law effects on rents guide.
Winners, Losers, and the Unintended Consequences
The regulatory shift has had a varied impact on different stakeholders within the city’s complex ecosystem.
A Boon for the Hotel Industry
One of the clearest beneficiaries of the crackdown has been the hotel industry. With fewer apartments competing for short-term visitors, hotels have reported an increase in occupancy rates and, consequently, rising prices. This outcome aligns with the historical lobbying efforts of the hotel sector, which has long viewed platforms like Airbnb as a competitive threat. Hotels have experienced notable price increases, with some reports indicating rates climbing by approximately 6% in 2024, and potentially more in 2025 as demand continues to surge.. Find out more about Local Law 18 New York City housing crisis tips.
Quieter Streets, More Peaceful Homes
For permanent residents living in apartment buildings, many have reported a tangible improvement in their quality of life. The reduction in transient guests means a decrease in noise and foot traffic, contributing to a greater sense of stability and privacy within their buildings. This aspect of the law has been successful in addressing legitimate quality-of-life concerns for a significant segment of the population.
Challenges for Tourists and Occasional Visitors
On the flip side, the crackdown has made it considerably more difficult and expensive for tourists and other occasional visitors to find accommodation outside of traditional hotels. The limited number of legally operating short-term rentals means fewer choices and potentially higher prices for temporary stays, impacting the experience for those visiting the city. This can affect not only the visitors but also the local businesses that rely on tourist spending.
Rethinking the Strategy: What Comes Next for NYC’s Housing Market?. Find out more about NYC Airbnb ban 30 day rental shift strategies.
The experience of the past two years offers crucial lessons for New York City and other urban centers grappling with similar housing challenges. The path forward requires a multifaceted approach that prioritizes long-term solutions over quick fixes.
The Unavoidable Necessity: More Housing Construction
The most consistent conclusion drawn from New York’s experience is that addressing a housing shortage fundamentally requires a significant increase in the supply of new homes. Policies that focus solely on regulating existing housing stock, such as short-term rental bans, are insufficient on their own to tackle deep-seated affordability issues. A comprehensive strategy must prioritize and facilitate the construction of more residential units across all income levels.
Fine-Tuning the Rules: The 30-Day Threshold and Beyond. Find out more about New York Airbnb crackdown housing supply impact overview.
The shift by many former hosts to offering 30-day minimum rentals highlights a loophole that undermines the law’s intent to reintegrate units into the long-term market. Policymakers may need to re-evaluate whether a 30-day threshold is effective or if longer minimum stay requirements, or other regulatory approaches, are necessary to truly impact housing availability. Discussions around potential amendments, such as those proposed for one- and two-family homes, indicate an ongoing debate about finding a balance.
Navigating External Pressures and Future Demands
Cities must also consider the interplay between external events and housing demand. Anticipated increases in tourism, such as those expected with major international events, place additional pressure on the housing market. This potential surge can lead to increased lobbying efforts to relax restrictions, further complicating the policy landscape. The city’s ability to host major events and attract visitors must be balanced against the imperative to house its own residents affordably.
Lessons for Urban Markets Nationwide. Find out more about NYC short term rental law effects on rents definition guide.
New York City’s journey with its short-term rental regulations offers valuable insights for other cities facing similar housing dilemmas.
Context-Specific Policy Design is Key
The effectiveness of regulations targeting short-term rentals is heavily dependent on local conditions, including the existing housing supply, zoning laws, and the concentration of short-term rentals relative to the total housing stock. What works in one city may not be applicable or effective in another. A one-size-fits-all approach is unlikely to succeed.
Differentiating Nuisance Abatement from Affordability Solutions
It is crucial to differentiate between the goals of reducing neighborhood nuisances and solving the broader housing affordability crisis. While restrictions on short-term rentals can address complaints and benefit industries like hotels, they are not a direct solution for systemic housing shortages. Policymakers must accurately diagnose the root causes of housing unaffordability before implementing regulatory measures.
The Enduring Power of Supply-Side Solutions
Ultimately, the most significant lesson is that addressing housing costs and availability fundamentally requires expanding the housing supply. Focusing solely on demand-side management or redistributing existing units through regulation, without a robust plan for increasing the total number of homes, is unlikely to yield lasting improvements in affordability. The path forward, for New York and many other cities, lies in building more housing.
While Local Law 18 has undeniably achieved its aim of drastically reducing the number of unregulated short-term rental listings, its promise of stabilizing New York City’s rental market and alleviating the housing crisis remains largely unfulfilled. The city’s housing challenges are deeply entrenched, stemming from a fundamental imbalance between supply and demand that regulations on short-term rentals alone cannot fix. The focus must now shift, with renewed urgency, towards comprehensive strategies that prioritize building more housing and fostering an environment where affordability is not just a lofty goal, but a tangible reality for all New Yorkers.