New York Cracks Down On Airbnb's: What Are the New Regulations and What Does It Mean for the Real Estate Market

The Weekly Recap

The AirBNB crackdown in NYC is now in effect, hope for a soft landing on inflation increased its chances with job growth cooling in August and Goldman Sachs putting US recession chances at 15%, down from 20%. The Federal Reserve is going to double its growth projections for 2023 while saying they will ‘proceed cautiously’ on future rate hikes and if you had a bad week, at least you weren’t stranded at Burning Man.

New York Cracks Down On Airbnb’s: What Are the New Regulations and What Does It Mean for the Real Estate Market?

New York City has begun enforcing its Airbnb regulations that limit an individuals ability to rent out their homes through platforms like VRBO and Airbnb. The city believes that Airbnb is directly responsible for the low inventory on the rental market which has pushed up pricing and that with this move, will be able to address some of the housing shortages that NYC is experiencing.

It’s been a long standing practice that you cannot rent out a home for less than 30 days, unless the owner or host is there as well. The new regulation requires owners and hosts to register with the city to be allowed to rent and even if they do, they are not guaranteed a license. So far, only 257 out of 3,250 have been approved.

Owners will also be hit with additional taxes and insurance requirements such as covering the city hotel room occupancy tax, state and city nightly room fees and additional state and city taxes. The first two of which sound absolutely ridiculous to even exist in the first place.

As far as the overall market is concerned, we’ll see a lot of listings be booted from the platforms but will hopefully see them reappear and listed as longer term rentals to help ease the pressure of low inventory. As more units come onto the market, especially as we head into fall, where the market historically begins its slowdown, it may provide some breathing room for an over stressed and saturated rental market, pushing prices down.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan.

Another YoY look at how the market performed this August compared to previous August’s. Once again, even with rates doubling from 2022-2023, the level of transactions remained relatively the same showing confidence in the market.

Mortgage Rate Update

For the fourth consecutive week, the 30-year fixed-rate mortgage hovered above seven percent. The economy remains buoyant, which is encouraging for consumers. Though while inflation has decelerator, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.

News You Can Use

• Fed Set to Double Its Economic Growth Forecast After Strong US Data Bloomberg

• Fed Governor Waller Agrees the Central Bank can ‘Proceed Carefully’ on Interest Rates CNBC

• There’s a 15% Chance US Will Enter a Recession: Goldman Sachs NY Post

• Where to Put Your Cash Now for Every Income Level Wall Street Journal

• Economic Data Leads Companies and Governments Astray Wall Street Journal

• How Wall Street’s REIT Giants Are Reshaping U.S. Real Estate CNBC

• The US Economy’s Slow Return to a 2% Norm Axios

• Rising Rents Are Hitting American Suburbs the Hardest Wall Street Journal

• Goldman Sachs CEO Sees Us Stocks Rebound if Tech IPO’s Perform CNBC

• Thousands Leave Burning Man After Weekend Mired in Mud Wall Street Journal

The Deep Insight

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