Based in Los Angeles YouTubers Kristen and Michael knew their only chance to buy an income-generating property during the pandemic was to venture into the California desert. Last year, the couple purchased and remodeled a 2-bedroom, 1-bathroom ranch near Joshua Tree National Park. The couple, who asked to use only their first names, listed it on the Airbnb short-term rental platform (ABNB) as “House of the Seventh Ray”.
“Even in the quieter months, even in the summer, we got booked every weekend,” Michael told Yahoo Finance.
About a year later, and dozens of YouTube videos about the experience laterthe couple definitely notice more competition.
“Every house on our street that has sold in the last year becomes or has become an Airbnb,” Kristen said. “And we were one of the first in our neighborhood, actually, to do that.”
Airbnb listings have exploded during the pandemic. As it stands in September, 54% of active listings have been added to the platform since 2020, according to AirDNAa provider of short-term rental (STR) data and analytics.
Active Airbnb listings in Q3 2022 jumped 17.5% year-over-year and 22.1% from the same period in 2019.
The spike in short-term rental listings coincides with the pandemic housing frenzy as mortgage rates hit historic lows last year.
Property Management Inc., U.S. property management and services franchise says it added 46% STR supply to its portfolio in the past 12 months
“We’ll see that [short term rental] industry growth by 2031. It’s not going to slow down. We see the money coming in,” PMI’s executive director of short-term rentals Marianne Heder told Yahoo Finance.
For much of the pandemic, hosts have been able to command top dollar for their accommodations. Remote working and cash-strapped consumers have helped fuel demand. Airbnb Average Daily Stays costs 5% more than a year ago and 40% more than two years ago.
The rental requirements of some hosts, such as pre-departure cleaning duties, and the lack of transparency of upfront prices on the platform have recently drawn criticism. via the viral hashtag #Airbnbbust. (The company recently announced changes to respond to these complaints.)
The online backlash also featured screenshots of some STR hosts wondering why their occupancy rates had recently dropped. This prompted predictions of what might happen to the short-term rental market amid a long-awaited recession.
But for any host seeing fewer bookings, the issue may be more supply than demand, which remains strong.
Airbnb recently reported its most profitable quarter. Nights and experiences booked in the third quarter increased by 25% compared to the same period last year.
“While many consumers are cutting back on spending, the one area where I haven’t seen them cut as much is travel,” said Brian Chesky, co-founder and CEO during the company’s May 1 earnings call. november.
“Just as people continue to travel this quarter, we expect very strong demand for Airbnb next year,” he added.
Many people thought it “would be like printing money”
Hosts Kristen and Michael shared that they saw a slowdown in bookings in September, although they had no lineups to compare with last year. It could also have been partly related to Airbnb’s algorithm, different travel habits, and again more listings.
“One of the things we’ve seen is that with the influx, you have to differentiate yourself somehow,” Michael said. “Being like, how can we make this roster competitive.”
He added: “A lot of people thought going into this would be like printing money. I think they’re starting to find out it’s a business.”
More listings, higher property maintenance costs and a slowing economy could prompt STR owners in some areas to expand into other rental strategies, PMI’s Heder says.
“This industry will force you to pivot and pivot quickly,” she said. “I predict it will be more of a mid-term rental market.”
If online searches are any indication of what’s to come, the industry could see more hosts entering the market.
“Last year alone, 30 million visitors came to Airbnb to learn more about accommodations,” Airbnb said. Chesky recently told Yahoo Finance Live.
The business started during the Great Recession as a way for homeowners to earn extra income.
“I think it’s going to be in some ways similar to 2008,” Chesky said. “A lot of people who weren’t considering hosting are probably considering it now.”
Ines is a senior economics reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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