A Two-Year Reckoning: The Reality of Local Law 18

Two years on, the landscape of short-term rentals in New York City has indeed transformed. The Office of Special Enforcement (OSE) reports a dramatic reduction in illegal listings, with an estimated 3,000 active short-term rental registrations now existing in the city, a stark contrast to the tens of thousands estimated previously. This successful crackdown has effectively protected tens of thousands of housing units for long-term New Yorkers. However, the hoped-for economic benefits for residents and a cooling of the rental market have not materialized as anticipated. Instead, the city finds itself navigating a different set of challenges, one where rental prices continue to climb, and the core issue of housing scarcity remains deeply entrenched.

The Continuing Climb: Rental Market Trends Post-Regulation

Despite the significant reduction in short-term rental listings, New York City’s rental market has shown little sign of cooling. In fact, rents have persisted in their upward trajectory. As of September 2025, the average rent for all property types in New York City stands at approximately $3,608 per month. While some reports suggest a slight month-over-month decrease, year-over-year figures indicate an increase, with one report noting a 4.1% increase in average rents year-over-year as of August 2025. In Manhattan alone, the median rent in May 2025 was reported at $4,571, and by August 2025, the average rent across New York City reached $4,036 per month [cite:2, cite:3]. These figures paint a picture of a market where affordability remains a critical concern for New Yorkers, suggesting that the reduction in short-term rentals has not been enough to offset broader market pressures.. Find out more about New York City Airbnb regulations impact.

The vacancy rate, a key indicator of market health, remains exceptionally tight. In Manhattan, the vacancy rate recently hit a record low of 1.4%. Citywide, the net rental vacancy rate was reported at 1.41% as of 2023, the lowest since 1968. This persistent scarcity of available units, with only about 33,000 habitable units citywide out of 2.35 million in early 2023, underscores that the problem of housing supply is far more systemic than short-term rentals alone.

Host Behavior Shifts: The 30-Day Pivot

One of the most significant adaptations observed among former short-term rental hosts has been a strategic pivot towards longer-term stays. Instead of returning units to the traditional long-term rental market, many property owners are now offering accommodations for periods of 30 days or longer. This strategy allows hosts to leverage their properties for income while often circumventing the strictest regulations associated with short-term rentals. This segment of the market offers a degree of flexibility that appeals to both hosts and a new class of renters seeking more extended stays than a typical vacation but without the commitment of a year-long lease.

This shift to longer-term rentals, often falling into the 30-to-90-day bracket, means that while these units may not be actively listed as short-term rentals, they are also not contributing to the traditional long-term housing supply that proponents of Local Law 18 had hoped for. It represents a recalibration of rental strategies, driven by both the regulatory environment and the economic incentives for property owners to maintain consistent income streams.. Find out more about Local Law 18 housing supply New York guide.

The Hotel Sector’s Resurgence

The hospitality industry, a long-standing advocate for stricter short-term rental regulations, has demonstrably benefited from Local Law 18. With fewer competitors from the short-term rental market, hotels have seen an uptick in demand and, consequently, an increase in their revenue. Reports indicate that hotel rates in New York City have risen, with some sources noting an increase of approximately 7% in average daily rates (ADR) from 2023 to 2025. In fact, Manhattan hotel ADR peaked in 2024, exceeding 2019 levels by over 26%.

The average nightly rate in Manhattan during the holiday season in 2024 reached a record $417. For the overall Manhattan hotel market, Q4 2024 saw an average occupancy of 89.3% and an ADR of $420.74, leading to a RevPAR increase of 11.7% year-over-year. This performance places New York City’s hotel market among the nation’s leaders in post-pandemic recovery, with projections for 2025 visitor numbers expected to surpass 2019 levels. While this is positive news for the traditional lodging sector, it also highlights a redistribution of the tourism accommodation market rather than an expansion of housing options for locals. Travelers are now facing higher costs for lodging, with a significant portion of these higher rates potentially passed on to consumers.

The Broader Housing Picture: Systemic Challenges Unaddressed. Find out more about NYC short-term rental ban effect on rent tips.

The core of New York City’s housing predicament lies not solely in the availability of short-term rentals, but in a fundamental deficit of overall housing supply. Experts suggest that even the significant number of units previously operating as short-term rentals represented a relatively small fraction of the city’s vast housing stock. Therefore, their reallocation, even if fully returned to the long-term market, has had a marginal impact on the overall supply-demand imbalance.

Housing Supply vs. Rental Regulations: A Fundamental Disconnect

New York City faces a chronic shortage driven by decades of underbuilding and complex zoning laws. While Local Law 18 has successfully targeted a specific segment of the rental market, it does not address the deeper issues of housing production. As of 2023, the city’s net rental vacancy rate was a mere 1.41%, with 9.2% of rental housing considered overcrowded. The city urgently needs new housing construction of all types. Encouragingly, there are signs of a potential turning point in construction. In the second quarter of 2025, new building permit filings increased by 43% year-over-year, indicating a potential uptick in future housing supply. However, the pace of new housing development remains a critical factor. In 2024, the city saw a 4.8% decrease in permits issued for new housing units, though the number of units completed in new buildings increased by 21.5%.

The debate often highlights a crucial distinction: regulating existing rental stock versus increasing the overall housing supply through new construction. The current regulations have primarily focused on the former, with limited success in addressing the latter. This emphasis on regulation, without a commensurate increase in new units, means that the underlying drivers of high rents—a lack of supply and high demand—remain largely unchecked.. Find out more about Two years of NYC Airbnb crackdown analysis strategies.

The Economic Rationale Behind Alternative Stays

For property owners, the decision to shift to longer-term rentals (30 days or more) is often driven by a complex interplay of economic incentives and regulatory navigation. Renting for periods of 30 days or longer can offer a balance between generating consistent income and retaining a degree of control and availability over their property. This strategy allows owners to capitalize on demand without the full commitment and potential restrictions of traditional long-term leases, which can be subject to rent stabilization laws and longer tenant protections.

The economic rationale is clear: while a short-term rental might offer higher per-night rates, longer-term stays provide more predictable cash flow and reduce the administrative burden of frequent turnovers. This makes the 30-day-plus model an attractive compromise in the current regulatory climate. However, as noted earlier, this means these units are not directly alleviating the shortage of traditional, year-round apartments for the average New Yorker.. Find out more about New York City Airbnb regulations impact overview.

Looking Ahead: The Looming Specter of the 2026 World Cup

As New York City gears up to co-host major events, including the 2026 FIFA World Cup, the demand for accommodations is expected to surge. The city anticipates welcoming over 68 million visitors in 2025, with projections suggesting even higher numbers following the World Cup [cite:2, cite:4]. This anticipated influx has already spurred discussions and lobbying efforts from platforms like Airbnb, advocating for a relaxation of current regulations. Their argument centers on the need to accommodate the massive number of visitors expected for such a global event and the potential economic benefits tourism brings.

The 2026 FIFA World Cup, with matches scheduled in nearby East Rutherford, New Jersey, is poised to draw millions of international and domestic visitors. The New York/New Jersey region is expected to see over one million visitors for the event. Hotels are already anticipating increased demand, with average nightly rates expected to rise significantly. The current strong performance of the hotel market, with high occupancy rates and rising ADR, suggests that the infrastructure is already being stretched. The challenge will be balancing the accommodation needs of this massive influx of visitors with the existing housing stock and the regulatory environment in place.

The Future of Short-Term Rentals: Calls for Reform. Find out more about Local Law 18 housing supply New York definition guide.

In response to the current regulatory environment and the anticipated tourism boom, there are ongoing discussions and proposals for reform. A new bill, Intro. 1107, has been introduced, suggesting “modest reforms” to Local Law 18. Proponents, including Airbnb and various community groups, argue that the current law disproportionately harms homeowners, particularly in Black and Latino neighborhoods, and small businesses by limiting income-earning opportunities and reducing visitor spending in the outer boroughs. They contend that the law has not delivered on its promises of affordability and has instead made the city less accessible for families visiting the city.

Critics, however, view Intro. 1107 as a step backward, potentially incentivizing landlords to prioritize tourists over tenants and undoing the gains made in reclaiming housing units. They argue that the law’s success in reducing illegal rentals and mitigating neighborhood nuisances should not be compromised. This debate highlights the ongoing tension between addressing housing affordability and supporting tourism and property owner income, a tension that will likely continue to shape New York City’s regulatory landscape.

Conclusion: A Call for Comprehensive, Supply-Side Solutions

Two years after the implementation of Local Law 18, New York City’s short-term rental regulations have achieved a significant reduction in illegal listings and may have contributed to improved neighborhood quality of life in some areas. The hospitality industry has also seen tangible benefits. However, the overarching promise of easing the city’s housing affordability crisis and substantially increasing the supply of long-term rental units has largely fallen short.

The persistent rise in rents, coupled with historically low vacancy rates, underscores that the path to housing affordability in New York City is far more complex than regulating a specific segment of the rental market. The current situation demonstrates that while regulations can address specific issues like neighborhood nuisances and competition for hotels, they are not a panacea for deep-seated housing supply shortages. The fundamental challenge remains the need to increase the overall housing stock through new construction and to streamline the development process.

Moving forward, New York City must consider broader, supply-side solutions. This includes fostering an environment conducive to building more housing at all income levels, reviewing zoning regulations that may impede development, and finding innovative ways to expedite construction. The success of future housing policies will depend on addressing these systemic issues, ensuring that regulatory interventions are part of a larger, integrated strategy that prioritizes the creation of more homes for all New Yorkers.

What are your thoughts on the current state of New York City’s housing market? Share your experiences and perspectives in the comments below.