Daily Rental Growth Soars by as Much as 157 Percent in Tourist Markets as Airbnb and Vrbo Hosts Look to Recoup Revenues
Faced with the prospect of lost income due to COVID-19 travel restrictions, many daily rental owners could be transitioning properties from Airbnb and Vrbo rentals to seasonal rentals, according to new research published by realtor.com. Today’s report finds that tourist destinations are seeing a significant increase in furnished seasonal daily rentals, as hosts look to lock tenants into one- or three-month leases.
The jump in seasonal rentals is somewhat localized, with the most significant year-over-year increases in Nashville, Tenn. (185 percent), Austin, Texas (160 percent), Orlando, Fla. (82 percent), Las Vegas (56 percent), Chicago (49 percent), San Antonio (49 percent), New Orleans (48 percent), Honolulu (47 percent), Jacksonville, Fla. (42 percent) and Bridgeport, Conn. (35 percent). Just since the end of February, these Airbnb and Vrbo hubs saw an average increase of 74 percent in seasonal rentals. By contrast, seasonal rentals in the top 100 U.S. metros were only up 21 percent, and all other rental inventory declined by 2 percent in the same period.
In Nashville, Tenn., the most impacted market, seasonal rentals are up 157 percent since the end of February. This growth is a massive departure from last year’s trend, in which furnished and seasonal rentals declined 28 percent during that same period. By contrast, the rest of the Nashville rental market saw a 9 percent decline in daily rental inventory in the past few months. Similarly, in Austin, Texas, furnished rentals rose 129 percent compared to 2019, when they were down 30 percent during that period.
“Many short-term vacation rental owners rely on rental income to pay the property bills and meet their mortgage obligations,” said George Ratiu, senior economist, realtor.com®. “If people aren’t traveling or don’t feel comfortable staying in someone else’s home — that lost income could lead to missed payments or even foreclosure. For this reason, owners are looking for seasonal renters, who can provide occupancy and income for a longer period and give owners the breathing room to weather the current drop in short-term demand.”
Shift is unlikely to ease local housing shortages
Unfortunately, this shift is unlikely to have a meaningful impact on local housing markets which are experiencing historically low inventory — down 19 percent year-over-year nationally for the week ending May 9. Many property owners are keeping the units furnished and focusing on one- to three-month leases, which won’t meet the needs of typical renters looking for stable, long-term housing.
Typically, owners who are feeling financially strained might look to sell a rental unit. However, selling a property is more challenging in the age of COVID-19. Realtor.com®‘s latest published weekly data shows that homes are taking 13 days longer to sell on average than the same time last year, the steepest slowdown since 2013. And with homebuyer sentiment at its lowest level since The Great Recession, selling properties is a less viable option, leading many owners to convert to seasonal rentals as a faster and less risky option.
“In the short-run, it’s unlikely that we’ll see many of these units turn into more traditional daily rental, as owners can likely make more money with seasonal furnished rentals. However, the longer COVID alters consumer behavior, the more difficult it will be for vacation daily rental owners to cobble seasonal leases together, and this could eventually mean an increase in for-sale inventory in these markets,” said Ratiu.
Top Ten Metros with Seasonal Rental Inventory Growth
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