Canada's short-term rental bans and rents: what returned to the long-term market, and what actually moved prices

In 2023, as rents in Hamilton rose faster than anywhere else in Ontario, the city passed one of the strictest short-term rental rules in Canada. Toronto, Vancouver and Montreal had done the same. The promise was simple: take homes off Airbnb and they will go back to people who need somewhere to live. Since then, the research says the promise was mostly politics.

1The case rested on three links, and all three were weak

The research sets out the argument the bans depended on: that STRs significantly reduce long-term housing supply, that banning them returns those units to the long-term rental (LTR) market, and that this added supply lowers rents.Summary Its verdict on the chain is blunt: each link in this chain is weaker than political messaging suggestedSummary.

The best Canadian test of the first link used Airbnb's own listings and federal rent data across 330 Canadian neighbourhoodsSection 1. It found: The average share of dwellings used for "high-use" Airbnb activity was less than 0.5% per neighbourhoodSection 1, and that cities with rules were not cheaper afterwards: restriction-adopting cities tended to have higher rents — suggesting these cities adopted the policies because they were already in housing stress, not that the policies caused affordabilitySection 1. Its author put the conclusion plainly: "If your goal is to reduce short-term rentals so that rental prices across the market come down, it's not going to happen."Section 1

Statistics Canada reached the same place by a different route. Short-term rentals that could plausibly serve as long-term homes accounted for less than 0.5% of housing units in Canada's five largest CMAs in 2021Section 1. Only resort towns had enough to matter, and those are precisely the areas exempted from B.C.'s 2024 principal-residence law because tourism cannot be substituted thereSection 1.

2Few of the homes came back

New York ran the biggest test. Its ban removed most listings, but very few became ordinary rentals: NYC's 90% suppression yielded ~1,400 confirmed LTR conversions; the rest pivoted to medium-term, sat vacant, were sold, or kept operating illegally.§5 Canada has no better count. The lead researcher on Canadian short-term rentals conceded the central gap himself: "It's still unclear what happens to these units after they are removed from the STR listings."§1

And the numbers were never big enough to matter. In the research's words: The arithmetic does not work: <0.5% of stock cannot offset a deficit measured in hundreds of thousands of units.Section 8

Vancouver's own count is small against the need: about 2,700 units returned to the long-term marketSection 2 in two years, against a CMHC-estimated supply gap of roughly 570,000 units in B.C. by 2030Section 2. In Montreal, more than half of the ~4,000 STR units operating in Montreal were unauthorizedSection 2. The estimate most quoted by politicians, that Ontario short-term rentals added billions to rent bills, is essentially a counterfactual modelling exercise rather than a direct measurement of paid rents fallingSection 2.

3What banned hosts did instead

The research sorts what happens to a banned listing into five outcomes. The largest is the one rules rarely catch: Medium-term (30+ day) rentals — by far the largest substitution channel.Section 5 Toronto's own Airbnb help page actively directs hosts to "switch to long-term stays (28 or more nights)."Section 5 Those stays are typically furnished, premium-priced corporate/relocation rentals at well above market LTR rates and do little for affordability for ordinary rentersSection 5.

The others are sale, vacancy, and quiet law-breaking; enforcement officers say enforcement is the binding constraint, not the ruleSection 5. The one outcome the bans promised is the rarest: True conversion to long-term rental — the smallest bucket.Section 5

4Where rents fell, something else did it

Rents did come down in Toronto and Vancouver. In Toronto: November 2024 average apartment/condo rents down 9.4% year-over-year to $2,640§1. But the research traces the fall elsewhere: the dominant drivers appear to be new condo and purpose-built rental completions, slowing immigration and international-student inflows, and rate-driven investor exits — not STR-to-LTR conversion.§1

The cleanest test points the same way. Santa Monica passed a rule almost identical to Hamilton's, and a 2024 study compared it with similar cities that did not: A 60% reduction in Airbnb listings within two years.§3c And on rents — No statistically significant effect on residential rents.§3c

Other places with clean tests found small effects at best. In Los Angeles County, ordinances cut listings by ~50% and reduced rents by approximately 2%Section 3. In Berlin, each additional commercial Airbnb listing displaces 0.23–0.37 rental units; non-commercial restrictions had no measurable effectSection 3. New York went the wrong way: despite a 90% listings drop, rents rose 3.4% in the first 11 monthsSection 3, and Berlin's outright ban was quietly partially reversed in 2018 after sustained pushbackSection 3

5Hamilton acted at the peak, on a small market

Hamilton's timing is telling. Hamilton's 14.4% one-year increase from 2022 to 2023 was the largest of any Ontario community tracked by SPRC Hamilton — and that was the very year council was approving the STR bylaw.§2 The city hoped to win back about 650 homes. But its whole short-term market was small: Hamilton's STR layer was small (≈0.5% of housing stock), late, and structurally changing when the bylaw hitSynthesis.

6Who wanted the bans

The coalition behind the bans had reasons beyond the evidence. In New York, the hotel industry spent roughly an order of magnitude more on political contributions than Airbnb in the run-up to Local Law 18Section 6. In Canada, the academic group most cited by policymakers is funded in part by the Hotel Association of Canada and the B.C. Hotel AssociationSection 6. A former New York deputy mayor for housing said she "never saw data showing that short-term rentals were affecting the housing crisis in a significant way."Section 6

The research's conclusion about the whole episode is that it was mostly political, with a thin layer of supporting evidence that has been substantially overstated in public discourseSection 8. The economist behind the Canadian test gives the measured version: regulation "can be part of the policy mix, but it's not going to get you much bang for your buck on its own."Section 8

7The bans squeezed a kind of housing that was just appearing

Many of the listings were not tourist stays at all. They were rentals of 30 to 90 days, for nurses on contract, people between homes, students and workers on placement — people who cannot sign a year's lease. Researchers now treat this as its own tier, one that is "neither housing nor hotel,"§5 and Canadian rules do not account for it. The Hamilton bylaw, by hard-capping any single stay at 28 nights, particularly bites the 30–90 day cohort, even though those stays are widely accepted as the least harmful to long-term housing stock.§3e

The research ends on a position it thinks the evidence supports: regulate commercial multi-unit STR operators tightly, leave principal-residence hosting largely alone, and stop pretending that any of this is a substitute for building more homes.Section 8

8What this explains

It explains why rents kept rising in Hamilton for a year after the crackdown: the rule was too small for the problem and arrived too late. It explains why the cities that did see rents fall cannot credit the bans: the fall came from supply, migration and interest rates. And it explains who quietly paid — not tourists, but people needing a home for 30 to 90 days, who now have fewer places to go. A housing shortage measured in hundreds of thousands of homes was never going to be fixed by a few thousand listings. The bans were easy to pass and easy to explain, which is not the same as working.