Short-Term Rental Bans Don’t Solve Long-Term Housing Shortages

• Short sited: New York City banned a large number of its short term rentals but it did next to nothing for the city’s housing affordability.

• Power grab: A new Texas-based data center REIT is banking on the availability of cheap power to help it win the data center race.

• Yelling timber: Dropping lumber prices are a bad sign for the state of development across the country but it could lead to more mass timber buildings.

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Editor’s Pick

Short-Term Rental Bans Don’t Solve Long-Term Housing Shortages

Two years after New York’s Local Law 18 effectively banned most short-term rentals, the housing market looks remarkably unchanged. Tens of thousands of Airbnb listings vanished, yet rents remain at record highs and vacancies near historic lows. Instead of flowing into long-term leases, many of those former short-term units have either stayed dark or shifted to minimum 30-day rentals, doing little to ease the city’s chronic shortage of housing.

The numbers help explain why. Even at its peak, New York’s Airbnb inventory hovered around 38,500 units, a small fraction of the city’s more than one million market-rate apartments. Academic studies have consistently found that short-term rentals can raise rents and reduce availability, but usually in modest, localized ways. The effects are most pronounced when entire units are operated year-round by professional hosts, not when owners are occasionally renting their primary residence. In New York, the vast imbalance between demand and the slow pace of new housing construction makes the overall market relatively insensitive to those marginal shifts.

The crackdown has delivered some clear outcomes. Hotels have benefitted from higher occupancy, and residents in certain buildings report fewer disruptions from transient neighbors. But in terms of affordability, the policy has not delivered. Restricting short-term rentals may address nuisance issues, but it hasn’t made a dent in the underlying imbalance between housing demand and supply. The structural shortage of homes is so severe that the removal of tens of thousands of rentals amounts to little more than a blip, quickly absorbed without changing the citywide trajectory of rents.

Outside New York, the picture is equally complex. Research shows that in cities where housing construction is constrained, short-term rentals can add measurable pressure to rents. But where supply is more elastic, the impact is much smaller. The policy effectiveness varies by market, suggesting there is no one-size-fits-all solution to linking short-term rentals and housing affordability. Local conditions—zoning rules, vacancy rates, and construction pipelines—shape outcomes far more than blanket restrictions.

The lesson from New York is that banning Airbnbs is not a substitute for building more housing. Policymakers looking to tame costs by targeting short-term rentals risk misdiagnosing the crisis. Lasting affordability gains will come from adding homes, not just eliminating alternative uses for the ones that already exist. Without tackling the root causes of supply scarcity, restrictions on Airbnbs may score political points but will leave the underlying affordability challenge unresolved.

Overheard

Power Is the New Land in the Data Center Boom

Fermi, the energy-focused REIT co-founded by former U.S. Energy Secretary Rick Perry, just filed for an IPO as it prepares to build a massive data center and power infrastructure campus near Amarillo, Texas. The nearly 6,000-acre "Hypergrid" project promises up to 11 gigawatts of mixed energy, including nuclear, gas, solar, and battery capacity. The goal is to bring its first gigawatt online by 2026.

As the dust settles on that headline, it’s worth remembering that for hyperscale data center developers, access to reliable, high-capacity power isn’t just a nice-to-have—it’s everything. Eighty-four percent of data center executives rank energy access among their top three site selection criteria. In many markets, land is abundant. What’s scarce is power that can handle racks of GPUs humming 24/7, with consistent interconnection and minimal delays.

That scarcity is a shift in what drives development location strategy. Instead of chasing the cheapest plot, developers are chasing reliable billing-cycle power. And that’s not a small shift—it changes the economics, the partnerships, and the timelines. If you’ve secured a gigawatt of reliable, branded electricity, you’ve unlocked something far more valuable than land ever was.

Will Falling Lumber Costs Spark Interest in Mass Timber?

Lumber prices have slumped roughly 25 percent since early August, tumbling to around $522 per thousand board feet. That rapid descent, especially after stockpiling on tariff fears, is flashing warning signs not just for the housing market but for broader economic health. Producers like Interfor and Domtar are already rolling back output, a move born of oversupply and weakening demand.

For advocates of mass timber, this could feel like a moment of reckoning. Cheaper wood could pull more developers toward mass-timber structures like cross-laminated timber, glulam and other engineered products, where material costs are a critical hurdle. Yet the broader uncertainty in lumber pricing and persistent weakness in housing starts and building permits complicates the calculation. Lower material pricing is one thing; long-term cost stability is another.

The result is a paradox: the same drop in lumber cost that should lift timber innovation may also hold back risk-averse developers altogether. Will they jump on mass timber before prices stabilize? Or wait it out, focused more on minimizing exposure than experimenting with new materials? In volatile markets, doing nothing sometimes feels safer than doing something new—and that ambivalence could mute the lumber-price tailwind just as it begins to build.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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