real estate agency New York

New York City’s new law banning most short-term Airbnb rentals, which came into effect in early September, has had a significant impact on the market. As few as 2 percent of the city’s previous 22,000 short-term rentals have been registered with the city. Many illegal listings have moved to social media and lesser-known platforms, with some still appearing on Airbnb itself. The number of short-term Airbnb listings in the city has dropped by more than 80 percent, going from 22,434 in August to just 3,227 by October 1, as reported by Inside Airbnb, a watchdog group monitoring the platform. However, only 417 properties have been officially registered with the city, indicating that very few short-term rentals have received permission to continue operating. This crackdown has given rise to a “black market” for short-term rentals in the city, according to Lisa Grossman, a spokesperson for Restore Homeowner Autonomy and Rights (RHOAR), a local group that opposed the law. Grossman notes that since the ban, the short-term rental market has gained traction on platforms like Facebook. She says, “People are going underground.”

The short-term rental landscape in New York has dramatically shifted due to this law. Individuals are turning to platforms like Craigslist, Facebook, Houfy, and others, where they can search for guests or properties without the oversight of Airbnb-like booking platforms. The increase in demand for such rentals is expected to drive hotel prices higher. A search for short-term stays on Airbnb reveals a limited number of listings across the city. Many previous listings have transitioned into stays of 30 days or longer, thus avoiding the need for city registration. AirDNA, a short-term rental intelligence firm, found just 2,300 short-term Airbnb rentals in New York City by late September. AirDNA’s data shows that long-term rentals now make up 94 percent of Airbnb’s listings in the city, reflecting the stricter requirements for short-term rentals. Hosts must meet stringent criteria to be approved for short-term rentals, such as allowing only two guests and the host being present during the stay. However, some hosts are attempting to work around these rules. Many Airbnb listings include an option for hosts to enter a registration number or claim an exemption. Despite these efforts, some entire units still appear to be available for short stays and do not seem to qualify as hotels or exempt units.

Inside Airbnb’s data shows that approximately 2,300 short-term properties have labeled themselves as exempt from registration on Airbnb, with several more not specifying their status. Another 35,000 are designated as long-term rentals. These numbers were not confirmed by Airbnb. The Mayor’s Office of Special Enforcement in New York, responsible for the registration program, has not provided an update on the total number of registered short-term rentals or whether violations have been issued for illegal listings. The law in New York City is just one example of how cities are responding to the growth of short-term rentals. Supporters of the rule argue that it will free up apartments for local residents facing high rents and housing shortages. However, some, including small landlords, believe it will eliminate a flexible source of income without significantly addressing the housing crisis. Smaller landlords are lobbying New York City councilors to revise the rules to allow them to continue renting out their units. RHOAR represents hosts who own and occupy single-family homes or homes with two dwelling units. They argue that they have been unfairly grouped with larger landlords.

Grossman states that RHOAR has met with city councilors in an attempt to change the law to permit smaller hosts to legally offer short-term rentals. Beyond Airbnb, people are posting listings and seeking short-term rentals on Facebook groups. Craigslist advertisements for rentals include weekly or nightly prices. These off-platform rentals pose risks to both guests and hosts who may not have the protection of larger companies like Airbnb. As for Airbnb, it is turning its focus away from New York City, which was once its largest market. Airbnb CEO Brian Chesky has mentioned that the company is exploring longer rentals, as well as car rentals and dining pop-ups. The company is also looking to expand its presence in Paris, its largest market and the host of the 2024 Summer Olympics. “I was always hopeful that New York City would lead the way—that we would find a solution in New York, and people would say, ‘If they can make it in New York, they can make it anywhere,'” Chesky said in September. “I think, unfortunately, New York is no longer leading the way—it’s probably a cautionary tale.”

Source: WIRED

New York City’s real estate market has responded robustly to the economic uncertainties of the first half of 2023. Many potential buyers in our market initially postponed their plans following the 50 basis point increase in the Federal Reserve rate in December (which came after several 75 basis point increases). As mortgage rates continued to rise and the stock market declined, transaction volume, which had been steadily declining throughout the second half of 2022, remained sluggish in January.

Surprisingly, February saw a turnaround, and March brought further improvements. However, the successful deals were strongly linked to price reductions or setting highly realistic listing prices. There is no room for overly optimistic pricing in 2023. The high-end market (homes priced at $10 million and above) has borne the brunt of this correction year.

During the first two months of the year, few high-end listings found buyers, and the ones that did either possessed unique features or were fortunate to connect with that one buyer whose needs aligned perfectly with the property. Owners who purchased their properties since 2014 or 2015 have had to accept significant losses to make a sale. In the $4 million to $10 million market, the Olshan Luxury Market Report, which tracks contract activity at $4 million and above, saw a notable increase from just over 16 deals per week in January to an average of 25 deals per week in February, and nearly 32 deals per week for the first three weeks of March. Nevertheless, many luxury properties with seven, eight, or nine rooms can still linger on the market for extended periods, primarily due to pricing.

Since January, half of the emails received by New York agents have announced price reductions! Arguably, the most active market in the city is for lower-priced units, especially those priced at $2,500,000 and below. The rental market remains exceedingly strong, currently at its highest point in recent memory (though somewhat weaker than six months ago). Properties in the $2 million and below range tend to favor buying over renting, especially on an after-tax basis. Inventory remains limited at this level. Despite disruptions caused by the collapses of Silicon Valley Bank and Signature Bank, the New York market has experienced increased activity as spring approaches.

The Federal Reserve’s decision to raise its target rate by only 25 basis points, a repeat of its late January decision, suggests a halt to the more substantial increases that took the Fed rate from 0.25% to just under 5% within a year. Although the correlation between the Fed rate and mortgage rates is not perfect (mortgage rates are more influenced by the bond market), it’s clear that the considerable increase in the Fed rates has driven mortgage rates upward, impacting buyer confidence as monthly purchase costs rise.

Especially for younger buyers who’ve grown accustomed to the artificially low rates prevailing since the 2008 recession, a mortgage rate of 5% or 6% remains low by historical standards. The gradual acceptance of this reality by buyers has played a role in the real estate market’s gradual recovery. Several factors make it challenging to predict the second quarter accurately. The stability of regional banks remains uncertain, and the Credit Suisse merger with UBS signals that the banking crisis is not confined to the United States. Meanwhile, inventory remains tight in various segments of the New York market, and even cautious buyers often struggle to find suitable listings. Stock market volatility and inflation may continue, but the worst of the significant price declines seems to be behind us, and property costs have stabilized. Forbes reports that it’s an opportune time to strike a deal!