How Not to Make Housing Affordable

Kamala Harris could learn from New York City’s failed example

WSJ editorial. 

"Kamala Harris is promising to make housing more affordable, and her answers so far are more subsidies, rent control and national intervention in local zoning. She’d be wiser to look at how New York City’s interventions have made housing more costly.

A year ago this month, New York began enforcing new rules designed to make it harder for people to rent out their homes on a short-term basis. The claim was that these short-term landlords were taking space from city residents and making housing less affordable. That was an excuse. The real goal was to drive out Airbnb, an online platform that enables home owners to pick up extra cash by renting homes or apartments to visitors—while offering travelers cheaper rooms than the city’s hotels.

But whenever some new technology offers competition for customers, established enterprises see a threat. In this case those interests include the hotel industry and the Hotel Trades Council, a union. They are among the most powerful forces in New York politics and backed Mayor Eric Adams and predecessor Bill de Blasio for election.

The law they lobbied to pass requires people who want to list their homes on Airbnb to register with the city and prove they’re in compliance with the city’s regulatory machinery. For a stay of fewer than 30 days, the law also requires that the host must be present in the home.

What was the result? Airbnb declines to share its own figures about the effect on its business. But AirDNA, a short-term-rental data company, reports an 83% drop in New York City listings for stays under 30 days.

The damage to short-term rental firms is obvious. But in a statement last week Airbnb notes that travelers looking for affordable shelter are the big losers. Visitors to the Big Apple now pay on average about 7.4% more for a hotel room than they did a year ago. That’s more than three times the national average increase of 2.1%.

New York’s already high rents also continue to increase. StreetEasy says rents rose 3.4% in the first 11 months since the anti-rental law was implemented—outstripping the increases in Chicago, Boston and Washington, as well as nationwide. The vacancy rate in New York remains unchanged at 3.4%.

In any sane universe, the response to these results would be to repeal the law. But this is New York, whose political class has no understanding of how a private economy works. The last thing they’ll do is remove barriers to expanding the supply of housing. If Ms. Harris continues down this road, she will make housing less affordable."