Housing market slowdown rocks short-term rentals
Spike in supply as people look to monetize their properties
The housing downturn is having a knock-on effect on the short-term rental market, with a supply glut resulting in fewer bookings per short-term rental, The Wall Street Journal reports.
While the number of future nights booked in as of October was up nearly 16 percent year-over-year, the number of short-term rental listings in the U.S. rose 23 percent during that time, according to data from AirDNA, a short-term rental analytics firm.
With more short-term rental properties hitting the market every month — between 80,000 and 88,000 new listings were added per month over the summer, with about 66,000 and 70,000 new listings added per month since August — rental properties were seeing an average of 6 percent fewer nights booked, Jamie Lane, AirDNA’s vice president of research, said.
The reasons for the supply increase, industry experts told the outlet, include:
- The cooling of the market has led would-be sellers to hang on to their second homes – and their accompanying low-interest rates — by renting them out
- Second-home owners who bought properties before the pandemic have decided to enter the rental market
- Bracing economic downturn, people who own just one home are entering the short-term rental market to make additional money
The result is, despite the increased demand for short-term rentals, owners who are used to having their properties booked up are now seeing a significant downturn in their business.
Sabrina Must, a real-estate investor and content creator, has seen a significant drop in the bookings of her two-bedroom property in Encinitas, Calif. At one point, she could rent out her property for $1,000 a night on a holiday weekend. Now her rates start as just over a quarter of that.
“I’ve felt a massive drop,” she told WSJ. “I am so beyond stressed by it.”
Egan said he predicts a down market through the end of 2023.
“This could actually drive more homeowners into the market as they seek to monetize vacation properties and turn them from simply an expensive item into an income-producing asset,” he told the WSJ.
— Ted Glanzer