--- title: "Canada's short-term rental rules: supply, prices, and the mid-term rental tier that never formed" kind: "Article" topic: "Housing" date: "2026-10-10" url: "https://canopticon.com/articles/canadas-short-term-rental-rules" author: "Chris Telford" license: "CC BY 4.0" --- Niagara Falls is a hotel town. Dozens of hotels compete for the same visitors, and in winter, when the visitors thin out, the prices fall to meet them. Nobody bans hotels to make rooms cheaper; more rooms is how rooms get cheaper. So when Canadian cities answered record rents by banning short-term rentals — removing places to stay — the move looked backwards. This article asks whether it was. ## Competition lowers the price of a place to stay The economics here is settled, and it has a name: a published mechanism known as **supply elasticity in lodging markets**. Hotels take years to build; a spare room can be listed tonight. The canonical study found home-sharing reduced peak-period hotel-room prices and increased consumer surplus, with the largest gains accruing in cities with the most inelastic hotel supply. Take the supply away and the prices go up. When New York choked off short-term rentals, NYC hotel ADR jumped roughly 7.4% versus 2.1% nationally — the average room rate. The research calls it the "competition removed → prices rise" prediction borne out directly. Other studies measure the same pressure on hotels. In Texas: Each 10% increase in Airbnb listings reduced hotel revenue by roughly 0.4%, with the largest impact on lower-end and tourist-segment hotels. After New York's crackdown, Manhattan ADR reached an inflation-adjusted record near $445/night in December 2024. A Congressional Research Service primer states it directly: "STR de facto bans … have been shown to increase hotel prices due to decreased competition in accommodations." The hotel savings came with a housing cost elsewhere, which the research does not hide. An early New York study: Found that doubling Airbnb listings was associated with 6–11% home-value appreciation, though it argued the wider economic gains outweighed it at city level. ## Short-term rentals add demand, not only take homes The worry behind the bans was that every listing is a home taken from a renter. The best study of it found something more mixed: Airbnb causes a **mild** decrease in long-term rental supply — and also a **market expansion effect** — i.e., it generates *additional* demand for residential-style accommodation that would not have otherwise materialized in either the hotel or LTR market. In Canada, the measured effect on rents was close to nothing. Testing 330 neighbourhoods in 19 cities, the Conference Board found "We find no compelling evidence that the level of Airbnb activity had a meaningful impact on rents. — its figure puts Airbnb's share of a 30% rise at at most less than 1 percentage point, or just under $10. > **Objection: One briefing from a business group is thin evidence** > > It is, and the research says so — the method is not fully public. But it points the same way as the rest: small effects per listing, and a ban that returned few homes. NYC's 90% suppression yielded ~1,400 confirmed LTR conversions; the rest pivoted to medium-term, sat vacant, were sold, or kept operating illegally. American work gives the same order of magnitude. Across the United States, STRs accounted for only about 0.4 percentage points of the 32.7% increase in housing prices over the analysis window. The study most cited in favour of restrictions found a 10% increase in Airbnb listings raises rents 0.42% and house prices 0.76%, which, the research notes, implies that eliminating Airbnb entirely would only reduce rents by single-digit percentages in the highest-exposure neighbourhoods ## There is a tier between a hotel and a lease Many short-term listings were never holiday stays. They were rentals of 30 to 90 days — for nurses on contract, people between homes, students on placement — who cannot sign a year's lease. Researchers now describe this as its own tier, "neither housing nor hotel," and propose regulating it as one: Their proposed planning principle would *legitimize* a parallel housing tier for furnished, flexible stays while still restricting wholesale extraction of stock. Hamilton's rule cut straight through 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. The better tool, the leading study argues, was a tax that rises with the price of the unit, not a cap on nights — day-caps suppress the market-expansion benefit without efficiently targeting switchers. Whether that tier helps renters depends on what it costs, and the research has a warning. The medium-term stays that banned hosts moved into are typically furnished, premium-priced corporate/relocation rentals at well above market LTR rates and do little for affordability for ordinary renters. A legal mid-term tier is a way to stop pushing those tenants into hotels and illegal listings; on present evidence it is not a way to make ordinary rents cheaper. ## What nobody has tested Here the evidence stops. It shows that more places to stay lower the price of staying, that short-term rentals barely move long-term rents either way, and that a medium-term tier exists. It does not show that a legal, large medium-term tier would pull year-long rents down. That is the step from Niagara Falls to Hamilton — from hotels competing with hotels to flexible rentals competing with leases — and no study has measured it. There is a theoretical route by which competition in short stays could reach long-term rents. If short-term returns fall, the opportunity cost of switching a unit to LTR falls and more housing flows into LTR voluntarily. The research calls this link not directly supported, but neither is the opposite claim that banning STRs lowers rents at the city scale, and it places the useful lever elsewhere: the policy-relevant variable is commercial (multi-unit) listings, not STRs in general ## What this explains It explains why the bans felt wrong in a crisis: they removed supply at the moment supply was most needed, and the supply they removed was the flexible kind that responds fastest. It explains why the rents they promised to lower did not move — short-term rentals were never a large part of the problem. And it points at a different design: a recognised tier for stays of 30 to 90 days, taxed by price rather than capped by nights, sitting between the hotel and the lease. Whether that tier would make renting cheaper is the experiment Canada has not run.