Short term rentals (STRs) have been something of a blessing and a curse for New Orleans. On the one hand, they provide a relatively easy addition income for New Orleans homeowners – many of whom earn as little as 14 percent below the national average in wages each year – and a cheaper, convenient place to stay for the 18.51 million visitors to the Big Easy. On the other hand, the proliferation of STRs has led to a myriad of problems from a lack of affordable housing to fundamental neighborhood and cultural changes.
Many hope that the new rules on short term rentals that took effect on December 1 will help alleviate some of those problems. Unfortunately, they have also created a Catch-22 situation for some residents. As property values rose and STRs became increasingly in demand, many homeowners sunk their savings into renovations in order to rent portions of their homes out in an attempt to hang on to their houses at all.
“Airbnb definitely helps me to afford my home,” Bywater resident Carmen Mills stated to Fortune. “My husband and I divorced five years ago, and I certainly would have had to sell the house if I hadn’t had Airbnb income.” Mills stated that a large reason for that is the doubling of property values (and therefore, property taxes) in a one-year period. Now she has plans to build tiny homes in her backyard as a way to double down on her STR income.
This is, of course, exactly what companies like Airbnb want to hear. They often advertise home-sharing as a way to get new properties advertising on the platform. Home-sharing “is one of the few tools available to any family that would like to stay in the community they love and turn their greatest expense – their housing – into an economic opportunity,” notes Airbnb spokesperson Laura Rillos.
Luckily, residents like Mills are the people that New Orleans’ new STR rules hope to protect – people living full-time on the properties they also rent out. It’s tourism companies and developers creating scarcity by solely building with STR income in mind that the new laws target. However, as noted by researchers at Tulane University studying gentrification: the grown of STRs pushes lower-income long-term renters out of the city centers – which means that some homeowners who used to rely on them now have to rely on STR income just to keep their homes.
“We can show pretty clearly that in certain parts of the city, short-term rentals are certainly having an effect of dislocating people from those communities,” Christopher Oliver, a professor researching gentrification at Tulane University said. According to the Housing Authority of New Orleans, increased gentrification (a byproduct of the rise of STRs) has resulted in an increasingly segregated city, with traditionally African American neighborhoods such as the Treme becoming increasingly white.
As reported by The Advocate/Times-Picayune, New Orleans officials say there was a surge of STR applications ahead of the December 1 deadline, with a backlog of over 1,000 applications. In addition, there are unbuilt projects that may result in at least another 1,000 applications. The city also received a “significant number” of building permit requests listing STRs as a potential use for the projects, and because the requests were filed before the new regulations took effect, those STRs will be allowed to operate.
Add that to the fact that enforcing the new STR rules is going to be very difficult, and it’s unclear whether they’ll make much of a difference at all. Although STR platforms like Airbnb have agreed to remove unlicensed rentals from their websites, taking the time to verify that and enforce the new requirements will be both a difficult and expensive undertaking.
Jenn Bentley is a freelance journalist whose work has also been featured in publications such as Wander N.O. More, The High Tech Society, FansShare, Yahoo News, Examiner.com, and others. Follow her on Twitter: @JennBentley_
