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The sweeping shutdowns across the U.S. intended to keep the coronavirus pandemic in check have been devastating to the economy—and especially anything related to travel, as pretty much everything one would do on a vacation was put on pause. Even as states are slowly opening up, many of those recreational activities remain off-limits—or people are reluctant to come out and do them. After all, not only is there the lingering threat of catching a deadly disease, but many people have lost their jobs—or are worried that layoffs still might be coming.
Travel searches for all popular U.S. vacation destinations dropped by 64% in March and April 2020 compared with the same time last year, according to a survey released last week by RentCafe. And a survey by Guesty, a rental property software company, of nearly 400 property management companies found that 64% of respondents said that cancellations were up by 76% to 100% compared with the same time last year. Nearly a third said they expect a 51% to 75% decrease in revenue for the year.
The vacation home rental market, dominated by such players as Airbnb, VRBO, and HomeAway, has taken a huge hit as a result. Over time, renting out a home or homes for visitors became a full-time gig, and a substantial form of income for many owners—which is what makes the crash of the vacation economy so devastating. Many homeowners who had relied on rental income have been forced to either try to sell their homes or completely revamp their business model to stay afloat.
So what are they doing to stay afloat? Instead of raking in relatively high per-night rents, some rental home owners are turning to leasing out their fully furnished properties for longer terms, up to three months. It portends a big shift in the market.
“COVID-19 is a terrible crisis in so many ways,” says professor David Wachsmuth, who studies home-sharing platforms at McGill University’s School of Urban Planning. “One of the things we’re seeing is a remarkable collapse of the short-term rental market, particularly in cities. The viability of running dedicated Airbnb operations is not looking good right now.”
To figure out which places have been hardest-hit by the collapse of home-sharing platforms like Airbnb, VRBO, and HomeAway, the realtor.com® economics team ran an analysis of the metros where furnished short-term rentals are now flooding the market—where they are shifting away from their mainstay: night-by-night rentals.
Looking at the 100 largest metros in the United States, the team scoured single-family homes, condos, townhomes, apartments, and other multifamily housing for keywords that identified furnished short-term properties. The metros eligible for analysis had at least 100 furnished short-term rentals in the last week of April, based on realtor.com data. The inventory growth trends were calculated by comparing the last week of February with the last week of April.
While there’s no way to know for sure whether the influx of furnished rentals available for less than three months has come straight from home-sharing platforms, they are unusual in the general rental market—so there’s reason to believe these new listings are overflow from Airbnb and VRBO inventory. And the markets that were unfortunate enough to make it into our top 10 are classic getaways for business and leisure. According to RentCafe’s survey, city trips fell among preferences from the first choice before the pandemic to the fourth after the coronavirus upended normal life.
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No summer fun in the city this year
A pair of nightlife hot spots saw the biggest increases in furnished short-term rentals in the United States: Nashville, TN, with a whopping 185% leap, and Austin, TX, with 160%.
The famously lively destinations lure millions of visitors a year eager to listen to live music in densely packed bars and dine at bustling eateries. While Nashville is partly reopening with bars and restaurants at 50% capacity, Austin’s stay-at-home order is still in effect until May 30.
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Under the circumstances, it’s no surprise that short-term rental owners are seeking alternative tenants. The owners of these furnished units are either renting to folks in between homes—in Nashville, 1,000 residents were displaced in early March after a tornado sliced through town—or trying to sell.
“I’m seeing more furnished listings on the market [for sale],” says Sher Powers, a spokesperson for the Greater Nashville Realtors who is also owner of a short-term rental.
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Just as short-term rental owners in Austin took a big hit when South by Southwest got canceled in mid-March, New Orleans’ landlords got slammed with financial losses by the cancellation of Jazz Fest. (The city’s notorious Mardi Gras celebrations, which take place over the month leading up to the Feb. 25 holiday, have been blamed for accelerating the spread of the coronavirus.)
The number of furnished rentals being offered for longer stays in New Orleans shot up 48%—sixth highest in the U.S.—though, it probably would’ve been far higher had local governments not banned nearly all short-term rentals six months ago.
Since December, stays of fewer than 30 days are allowed only in commercial zones or if the owner lives on-site.
“It’s causing [rental] prices to fall in areas that had a lot of short-term rentals,” says Brett Richman, broker and owner of Nola Homes Co. “Landlords are heading for dark times. They’re used to getting, like, $5,000 a month and now are looking for tenants for $1,200 per month.”
The correction has been much-needed for local renters in these popular vacation cities. A recent study estimated that of all the rent increases over a multiyear timeline, one-fifth could be attributed to Airbnb, says Wachsmuth: “That’s a crazy number.”
Traditional family vacation spots are a no-go
The kids are out of school, but family-friendly getaways have been shut down just like everywhere else.
For the first time in its nearly 50-year history, Walt Disney World closed for something other than a hurricane. And on March 27, Florida Gov. Ron DeSantis banned vacation rentals for stays shorter than 30 days, across the state. Hotels are open, but property owners are unable to take new short-term reservations. On Friday, the governor opened the door to allowing such rentals on a county-by-county basis.
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Orlando has seen an 82% increase in furnished rentals being marketed for over 30 days, the third-highest in the nation. While the owners of these sorts of properties are taking a hit, the swell in inventory is actually a positive for locals in the steadily growing metro—whose population has increased nearly 20% in the past decade—as there is a huge demand for affordable rental units throughout Orlando and the Interstate Highway 4 corridor.
The Realty Medics, an Orlando-based rental agency, has seen a 30% increase in rental applications this April compared with April of last year. Broker Tommy Weclew has been approached by some of these short-term unit owners to help find long-term tenants to pay the bills.
Built for visiting families, these apartment-style places—in touristy areas right around the parks in Kissimmee—often feature five bedrooms, five bathrooms, kitchens with granite countertops, and splashy community pools.
“The people renting them for a year are getting a really nice, unique experience for a rental house,” Weclew says. “It’s a whole different experience.”
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Meanwhile, San Antonio, TX, has long been a favorite urban getaway when school’s out for summer—its Sea World, Six Flags Fiesta Texas, the Alamo, and famous River Walk offer something for everyone. Normally at this time of year, Airbnb rentals often fill up on weekends with families for leisurely vacations, weddings, and graduations, but now bookings have been canceled through June.
San Antonio earned the No. 6 spot on the list of places with the biggest jump in furnished short-term rentals, with a 49% increase. The folks who have been taking advantage of these more affordable short-term rentals tend to be relocating for a job or changing homes.
“We’re getting people in transition from selling a home and trying to move into another home,” says Ruth Horace, a short-term rental owner and agent with Keller Williams Legacy in San Antonio. “Instead of a couple of days, we’re seeing a few weeks at a time.”
Waterside getaways also see a slump
Nearby Jacksonville, FL, in the No. 9 slot, has also seen a wave of longer-term furnished listings resulting from the short-term rental ban. Furnished rental listings have increased 42% since COVID-19 shut down the Sunshine State.
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Though the Gateway to Florida itself isn’t necessarily known as a vacation hot spot, the metro area encompasses several family-friendly, coastal communities where visitors rent out entire homes to enjoy the balmy ocean breeze. That includes Jacksonville Beach and St. Marys, across the state line in Georgia and just a ferry ride from Cumberland Island National Seashore. But throughout the two-state metro area, the vacation rental market has effectively died since March, local hosts say—in spite of Georgia lifting its short-term rental ban in late April.
Although these areas are attempting to lure tourists back, experts aren’t expecting to see visitors or vacation rentals pick back up anytime soon.
“It’s going to be a while,” says Wachsmuth. “It’s not an Airbnb-specific problem; it’s the tourism industry as a whole.”
The lack of tourism has crossed the Pacific, too. The family-friendly beach towns around Hawaii have seen their COVID-19 caseloads dwindle over the past two weeks—most likely due to the 14-day quarantine implemented for travelers entering the archipelago.
Honolulu Mayor Kirk Caldwell recently extended the quarantine order to June 30 for the metro. The lack of holidaymakers has prompted many short-term rental owners to list their places for longer stays. Honolulu ranked at No. 8, with a 47% increase in furnished listings.
Though there has been a 40% drop in vacation searches for Honolulu since lockdown began, it actually is considered one of the most resilient vacation destinations in the U.S. by the folks at RentCafe, as that drop is far lower than other popular travel spots. Nationally, the most popular vacation destinations in the before times have experienced a 64% decrease in travel searches from last spring.
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Bridgeport, CT, an upscale waterside metro of another stripe, has also seen an uptick in furnished short-term rentals hitting the market—the 10th highest in the nation, at 35%. Many of the wealthy towns that make up Connecticut’s Gold Coast on the Long Island Sound have banned rentals under 30 days and asked new arrivals to quarantine themselves for 14 days.
But the furnished longer-term listings in Westport, New Canaan, Darien, and similarly well-to-do ZIP codes are getting snapped up by New Yorkers desperately seeking an escape from the cramped COVID-19 epicenter of the United States for the next three to five months. Demand actually outpaces supply—especially for the homes that are so luxe there’s no need to leave the property.
“Right now in Fairfield County there are only five summer furnished rentals with a pool,” says Matt Murray, real estate salesperson with the Higgins Group. “The pricing ranges from about $7,000 to $75,000 per month for the summer.”
It’s these types of suburban and rural areas just outside major cities that have been better poised to weather the storm of fewer weekend warriors.
“The flow of new reservation requests has dropped by only 10% to 20% in U.S. suburban and rural areas,” Omer Rabin, a director at Guesty, recently told Forbes. “This is in comparison to a more than 50% decline in new reservations in urban markets (and a decline of over 70% in highly impacted markets).”
No convening at these convention centers
The Las Vegas metro, which has varying short-term rental restrictions from municipality to municipality (some of which come with $1,000 penalties for noncompliance), has seen the fourth-highest increase in furnished listings, up 56% as demand for yearlong leases has been skyrocketing.
“It seems like as soon as something becomes available, I get three or four people wanting to rent it,” says George Trombley, broker of leasing at 10 Blackbird Realty & Management. “I have a waiting list for the first time in 10 years.”
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And Chicago, like Vegas a longtime hub for conventions and travelers seeking an accessible urban experience, follows right behind Vegas with a 49% increase in furnished short-term rentals. The Second City has not been as hard-hit by COVID-19 as New York, but with a thriving nightlife and a densely packed population, it most certainly hasn’t been immune to the virus.
Even landlords and management companies that focus on yearlong leases are becoming more flexible with tenants, extending leases until the stay-at-home order is lifted or offering deals to renew.
“There’s a lot of people who don’t want to deal with the situation whatsoever,” says Maurice Ortiz, director of operations at Apartment People. “They don’t want people coming through their apartments, don’t want to look at apartments—some are just moving home and hunkering down with family until this clears up.”
Here’s the complete list of the 10 metros where furnished short-term rentals have increased the most, with the percentage increase:
- Nashville, TN, 185%
- Austin, TX, 160%
- Orlando, FL, 82%
- Las Vegas, NV, 56%
- Chicago, IL, 49%
- San Antonio, TX, 49%
- New Orleans, LA, 48%
- Honolulu, HI, 47%
- Jacksonville, FL, 42%
- Bridgeport, CT, 35%
The post In Airbnb Hubs, Furnished Short-Term Rentals Are Now Pouring Onto the Market appeared first on Real Estate News & Insights | realtor.com®.
source https://www.realtor.com/news/trends/in-airbnb-hubs-furnished-short-term-rentals-are-pouring-onto-the-market/
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