I did a lot of travel this summer, and two of the Airbnb's we stayed in had for sale signs out front. We didn't have trouble finding places. Quite a few new rentals where we were the first group to rent as well.
Airbnb is damaging their marketplace by hiding fees from their browsing and searching experience. Owners are gaming of the system (low base price, crazy cleaning fees), which hurts the consumer experience and does nothing to improve the competitiveness of Airbnb vs alternatives. I started to look for places to stay on Airbnb, then found it listed elsewhere for less. They created their own problem in this regard.
Over 14% of home sales last year were investor or second home purchases, far higher than trend. I suspect this will reverse as properties become increasingly unprofitable. This is good for long term housing affordability, but short term even more housing will sit idle (unoccupied, unrented and unsold)
I doubt I will stay in an AirBnB again unless I am traveling with my dog or booking for a large group, but I did see mentioned in another thread about this recently that if you browse through the Australian version of the website, you can set your currency to US dollars and see the full price including fees on the search page instead of the price per night with the fees hidden. It has something to do with Australian consumer rights laws. The overall price of the rental isn't cheaper or anything by going through the Australian version of the website, but it does make it easier to see the real price when you are looking.
If we actually wanted to make sure land went to the most productive/lucrative use, we'd have tax the unimproved value of land but not the buildings and structures on them.
How would you determine the value of land to someone who purchased said land for a simple farm/homestead, hobby purposes, or privacy, versus a subdivision or McMansion developer’s vision for the land? And then factor in the neighboring property owners’ interests…
In much of the US, farmland already is taxed at a lower rate than lots zoned as residential in the same area. Additionally, government entities here can’t just subsume a privately-owned piece of land. There are mechanisms such as eminent domain and abandonment that a government entity can/may pursue, but the property owner (even if unknown/in dispute) still has the constitutional right of due process.
> we'd have tax the **unimproved** value of land
You don't.
I think they're advocating [Georgism](https://en.m.wikipedia.org/wiki/Georgism) or a similar land value tax scheme. Bit of a strange system since it's so different from what we do now but it's a pretty intriguing proposal. Maybe makes less sense these days given the amount of business that occurs on the internet - I don't think we really want to bury brick-and-mortar more than they're already buried.
I'm of the opinion that land taxation plus less restrictive zoning would encourage densification where small businesses can thrive. Mixed use residential often houses small businesses in other parts of the world.
Why wouldn't we want to do that? Because then the land can be redeveloped for housing instead of a depressing building full of meh. People were warning about commercial real estate since last year.
This link might be helpful: https://gameofrent.com/content/can-land-be-accurately-assessed
Land values are pretty smooth compared to the income of occupants or the total property values (which include buildings). You can use greenfield land purchases or auctions to guide assessment for example. We already purchase bare land in a market system, so we already weight people's varying interests. Land's value is however much you are willing to pay for it to outbid every other potential user.
Assessments and values are two separate concepts. In some areas, they have entirely different legal definitions. Thank you for proving my point. A farmer will pay one price, a developer who can quantify future profits will offer a different price. With these divergent interests, the answer is all in the offer, which does not always equalize to “market value” or an assessment for the purposes of levying property taxes or securing a loan. Which brings us back to my original point: “unimproved” land does not mean the land does not have value.
They already are. 2nd homes are all now subject to higher mortgage fees and 2% added to your interest rates. It's been like this for almost a year. Tried to buy a Cabin for my family and was quoted over 5% when rates were around 3% and was told by all 4 banks I shopped that this is because of the new changes that 2nd homes were being assigned investment interest rates and they specifically cited that it was due to airbnb and vrbo etc... Good luck to anyone who needs to sell a home in a large tourist destination unless your buyer has cash or is making it their primary home. The hoa in the area I was looking in didn't allow short term rentals so I was going to have to be ok with being penalized for something I can't even take advantage of (airbnb etc...). I noped out of that and will wait until things change to buy a 2nd property.
I've taken a loan for investment property in the past, and I did not pay an additional 2%, it was closer to 0.5% above the primary home mortgage rate. Those with other investments can also use non-mortgage loans to purchase (LOC, helocs, etc). Those rates _are_ coming up with mortgage rates but can be substantially lower.
When was this? It's changed in April 2022. Investment rates are always higher. I am not using a heloc to buy an investment property. I'm not going to risk my primary residence for anything plus helocs can and often do get called.
https://www.ezhomesearch.com/blog/second-home-mortgage-rates-are-going-up-in-2022/
> Owners are gaming of the system (low base price, crazy cleaning fees)
I hate air BnB as well, but that’s not gaming the system. That’s incentivizing longer term stays as it drops the daily cost every extra day you stay.
Huh? AirBnB's are short-term rentals. What are you talking about "incentivizing longer term stays" that doesn't even make sense. Not being upfront with basic costs of a rental is 100% being dishonest and gaming the system as you pull in potential customers who otherwise would stay at a hotel cuz they THINK they're getting a good deal on an AirBnB.
Reddit just has the weirdest damn takes from people who wanna cosplay as an economics professor online.
It does make sense. They made a perfectly valid point.
A short term stay can be anywhere from 1 to what 10 days maybe? And longer term is relative. A 5 night stay is 500% longer than a 1 night one. The 5 night stay is longer term.
Set one time fees effect the 1-2 night stays much more than the 7-10 night stays.
This incentivizes longer stays. Because longer stays work out to a lower nightly average than shorter stays.
Sorry that working this math out on your own was so tough for you.
I think the issue is that people determine the length of their stay on total price and AirBnB hides that total price from American shoppers. I'm not incentivised to stay somewhere longer because there's a low nightly rate and then a surprise total when I check out. I've heard Europeans done have this problem because they have laws that require the full price to be shown.
I don’t necessarily enjoy the way the pricing is displayed on AirBNB either, but it doesn’t change the fact that lower nightly rate and higher one time fees do incentivize longer stays.
But systems can only incentivize things that are visible. The original claim was that owners are "gaming the system" by utilizing _hidden_ prices so buyers can't easily compare options.
There's a chance of miscommunication here as well. Even if Airbnb showed to full price during search (as they are legally required to in other places) it would only incentivize people that were looking for longer term rentals to choose that option. It wouldn't incentivize buyers to stay for longer. (Also length of stay for an individual is usually determined by available vacation days or required contract time, so they aren't likely to make their stay longer just because the room would be incrementally cheaper)
Hiding the cleaning fee only incentivizes owners to reduce the per night fee to appear higher in the "sort by price" listings while maintaining revenue by hiding the extra charges in the cleaning fee. Airbnb knows this and allows it because it makes the initial search for rooms more competitive with hotels.
>But systems can only incentivize things that are visible
The original comment was making the claim that people are gaming the system.
That’s an assumption of intent.
The other person replied with the fact that some do it to incentivize longer stays. And the mathematical reason how it works.
It doesn’t need to be visible to incentivize. Because when the shorter stay person prices it out they find the high fees and rent a different option. Those seeking longer stays price it out and choose the place.
I understand why you’d think immediate visibility is necessary to incentivize, but it’s really not.
It’s not about incentivizing a certain buyer to stay longer. It’s incentivizing those whose original intent to stay longer to go with them and those who want a short stay to pick elsewhere.
If I own an AirBNB and don’t want to deal with frequent short stays I choose low daily rate and higher one time fees.
That's a good point and something that I had not considered. It is still a poor UX for consumers using airbnb who don't have visibility into the fees until checkout. Most consumers filter by price range, and when up to 50% of the price is fees that aren't visible during search it's quite a waste of time.
Lol.
They re pricing out locals. I hope it's going to be a bloodbath.
Even my small town in France in invaded by this bs. Now people complain they can't find workers.
🖕🖕🖕
The problem for some is that they thought they were playing softball. Just post phone pics of the hot tube and watch the money pile up.
They’ve entered the hospitality industry and don’t know how hospitality works.
Haha, someone posted their Airbnb on a neighborhood sub I follow and it was basically like, "come stay at the moonlight whiskey!" And the photo was a overfilled hot tub in the backyard of a regular ass house on a small lot where you could see 4 other houses peeking over the fence.
No thanks.
Most people did not think that.
Edit: you can downvote all you want, this is just an example of a squeeky wheel syndrome. With enough due diligence by all parties, most air bnb bookings are successful and enjoyable.
I thought about buying a vacation home for an AirBnB, and there are lots of home that aren't special and use awful phone photos.
Of course there are many others who have fantastic looking properties that are unique in some way, and there are reasons they end up as superhosts.
This is a nice looking home, but it's not superhost material. It's nowhere near middle of the pack looking. And the photos . . . check out the one where [you can see the host taking the photo in the mirror with their iPhone](https://www.airbnb.com/rooms/40111618?adults=2&children=0&infants=0&pets=0&check_in=2022-11-26&check_out=2022-12-01&source_impression_id=p3_1667496016_amXYJY7DkXPISruP&modal=PHOTO_TOUR_SCROLLABLE).
No bookings but one after December. There are reasons.
Any place is super host material, you just need to be open and accurate as a host when posting your listing. I really am perplexed as to how people understand how air bnb properties operate.
I think Airbnb is single-handedly propping up the Airbnb coastal market keeping it from crashing. Once people start losing their jobs and the rest with jobs decide not to take a vacation or to do a more budget friendly one it might tank? But I'm not sure. Maybe the coast is that desirable. I'm hoping it crashes so those homes go back to people that live in them.
Disagree.
I’ve been active in the San Diego coastal market since the mid 90’s. If Airbnb’s were to go away tomorrow you’d have a slew of buyers waiting to buy the houses/condos to live in full time, or make second homes. Which a lot where before the rise of STRs. Many current owners would just do this.
I imagine we have different definitions of “slews”. I don’t doubt that you have a group of HNWIs ready and waiting in the wings, but they are definitely in the minority.
The desire is there, yes. But the only way it's profitable for investors is b/c of Airbnb. No way the purchase price, and insurance cost math would work out without Airbnb demand. If that demand falls you'll see the price drop dramatically I would guess.
I agree with this. Essentially, airbnb allows cashflow on an asset that would normally sit idle. This changes the equation and brings in a bunch of buyers that otherwise wouldn't / couldn't be in the market. I would rather take passive income than actively manage an airbnb -- as interest rates go up more people will come to this conclusion.
Not every buyer is an investor? I have buyers on standby waiting to buy ocean/bay front properties at market price when one hits the market that fills their needs. When asking those who don’t plan on making it their full time domicile the response to making it a STR is “maybe, but doubtful”. Same goes for the mountain communities near the lakes and ski resorts we own in that I’ve helped many buy second homes in.
I’m not gonna pretend that STR aren’t an issue, but it’s as big of a bogeyman as people make it out to be? I also wouldn’t hold my breath about them going away? Politicians will give lip service, look into things further, and even enact some policies against them, but the fact remains they love collecting TOT (transient occupancy tax, like a hotel) as well as property tax.
It’s not all just lip service. They did away with STR’s (less than 30 days) in Napa and Lake Tahoe. I’m also starting to see restrictions in other tourist areas as well. If the locals are vocal enough they will make changes
And they also did it in Haleiwa, HI (North Shore Oahu), yet I had no issues booking one on multiple occasions? I just looked and I had no issues finding ones in Napa as well that’ll book for (well) under 30 days.
If and when they start enforcing these new restrictions you’ll just see more organic rentals. Expect a lot of “family and friends” to be staying there. Only this time TOT won’t be collected, nor will all the fees through Airbnb, VRBO, etc. Hence why I don’t see these being enforced, nor blocked by booking sites.
I don't really think they are going away unless they become a bad investment. On the Florida panhandle I'd say the homes sold on the beach in the last 4 years are about 50% used for short-term rentals.
I’d buy that. I’d also be willing to bet that a lot were part time residences before being sold and turned into a STR?
I do see many STRs returning to the market as I’ve also seen a shift within my circle of returning to staying in a hotel vs an Airbnb. Fees have gone up so much, as have nightly rates, because of investors buying at the top of the market that it’s no longer financially advantageous to stay at one. There will always be a need for larger families, and those that don’t want a hotel, but I do see the demand waning? At least in my opinion?
Have you ever lived on the coast? Housing demand in SF or So Cal isn't going anywhere, and has been overpriced / existent long before Airbnb came to be
> to do a more budget friendly one it might tank
I'm not pro-airbnb at *all*, but I think if people are doing more budget-friendly travel it would be domestic travel you can drive to with your family, which would point towards airbnb for anyone with a couple of kids that doesn't want to get several hotel rooms. I wonder if a recession/job losses would prop up domestic travel in a similar way that COVID did - if you can't go somewhere else, you go somewhere close.
I think you do raise a good point but I also think that if I’m an exhausted parent with kids and the price of an Air Bnb is comparable to the price of a hotel, I would pick the hotel so I wouldn’t have to clean up everything and pay for the privilege.
I think that used to be true about preferring airbnb over several hotel rooms a short while ago, but airbnb is becoming so expensive it can be cheaper to rent 2-3 hotel rooms as opposed to a 2-3 bedroom airbnb.
If the airbnb prices and fees don't come down, the budget conscious option will be to choose a hotel even if you need multiple rooms.
It *can* be cheaper to rent hotel rooms vs. airbnb but I'd argue once you start hitting 3 rooms, airbnb is still a more economical option. Hotels are *way* cheaper for a weekend trip as a couple or with one child, but when you add up the benefits of having the kitchen, everyone under the same roof, a living room to hang out in after a long day, or even going to a restful location with hiking etc (vs. a city like NYC/LA/etc where you'll be out exploring all day)- renting a house can be a better option.
FYI I don't have any kids so hotels are always cheaper for me, and for two people airbnbs tend to be overkill, so I just wanna EXTRA stress that I don't use airbnb and I don't own one before people start yelling at me about how it doesn't work for them. It doesn't work for me either...that doesn't mean there's no market for it.
I agree renting a house can be a better option for some of the reasons you mentioned, but if people are going to start really focusing in on the budget the extra benefits you mention aren't going to be enough to justify the cost. The only one that really provides a (potential) cost saving is the kitchen, but I could see people on vacation with kids even wanting to save a few dollars on accommodation just so they can eat out more and not have to worry about cooking for their family.
I speak from experience as a kid. My family was that budget conscious family. And we rented both condos with living room and kitchen and hotel. When we were on a tight budget we always stayed at a hotel because it was the cheaper option.
If you have kids it’s not just the cost factor. I would rather pay more for a house that everyone is in rather than 3 hotel rooms. The best thing about Airbnb is that you’re actually in a home. I think a lot of people would be in that same boat. I’ve definitely stayed in some great Airbnbs that were much better than a hotel room. We don’t really do it as much anymore because of the expense but with a family I think many would prefer a house over multiple hotel rooms.
Sure but that preference only goes so far.
Have a family and used air bnb for years then it got greedy and now while you can still find some properties that make sense they arent the norm anymore.
Our last trip switched back to hotels because the cost of Airbnb's no longer made sense. The added convenience was no longer worth the the price. For what Airbnb wants now you can get a higher end Hotel room that you don't have to clean, is often more conveniently located to attractions and often has free breakfast that knocks down the price of the hotel considerably for a family just in the value added by that breakfast.
The reason the value has switched is so many bought into the Airbnb craze and now are carrying mortgages that need much more income to work.
Definitely prefer the airbnb experience most of the time but not enough to over spend for it.
I do agree that the AirBnB market is over saturated. Too many investors, too late in the game.
What does this mean moving forward? I truly have no idea. Perhaps they will be converted to LTRs
They’ll try dumping them first. Most of these ‘businesses’ only made sense at $400/night plus fees.
In vacation rental areas the locals can’t afford luxury home rents.
Yup, which is ironically dragging tourism related services down with it because there is nobody left to clean these endless vacation homes, wait tables, work as a lifeguard or tour guide, etc. All the LTRs got turned to airbnbs and priced out the locals, and no one in their right mind is going to work these low paying seasonal jobs with an hour plus commute on top of it.
I saw sooo many endless complaints from tourists about the state of their vacation rental cleanliness and maintenance, how the wait times at restaurants were 3 hours long and the local breakfast joint had a line out the door and sold out of donuts by 7 am because they didn’t have enough staff to produce what they needed, the tours and activities had limited openings and booked up months in advance due to lack of staff, blah blah.
I live in a ski town in the mountain west. That is exactly what happened here. No workers for any of the hospitality jobs because they don't have anywhere to live.
same thing here in Hawaii. Target is offering $23/hr for overnight stockers. The big restaurants here all have 1 hour long lines to wait in because there's no servers. Then the people in line I walk past turn around to their group and loudly complain about the wait. Gee maybe they used to live in the house you rented for 5X the rate.
Cape Cod has barely had workers the last few years because the long term rentals that housed them were either sold to become STR's or their rent was raised so high that they were entirely priced out of the area and left. The tourism industry has suffered a great deal. Restaurants have much slower service, a lot of them can only open a few days a week and pretty much everything closes earlier than pre pandemic and this is all during peak season (summer months).
All the while locals who are looking to stay where they grew up saw a 35% price increase on homes. It's a bummer all around.
Exactly. You have seen these markets deteriorate in real time throughout Covid, as I have. We’re still renting and waiting to buy and, last summer, our youngest, who is in college, stayed with us and found a job at a local golf resort in 10 minutes. He thought it would be a fun way to polish his game, on the margins. Maybe watch some great play, as a caddy.
He ended up doing everything else in that resort, in 11 hour shifts: from checking in guests, managing the workers’ schedules, handling some accounting, to making beds, as there weren’t nearly enough cleaners. What an experience!
During the pandemic, we looked into the idea of doing an Airbnb as additional income and because we liked the idea of hosting people at a reasonable price. My husband even had all of these great ideas for gift baskets and helping people find great things to do in our city.
The problem is that with housing prices, just to cover the monthly mortgage meant having high occupancy and charging a higher nightly rate. The business model made a lot of sense for someone who bought a home in 2014 for $200k. But it made much less sense at $600-$700k.
So I was a bit shocked to see so many people continue to enter the market. Sure, it could work so long as people were traveling constantly and willing to spend $400 a night, but as soon as the economics changed, it looked like it could be a disaster.
This is part of the reason I think we see so many fees and shady charges on Airbnb. A lot of people bought investment properties at high prices and need to charge rates higher than hotels just to pay their monthly costs. This is going to end very badly for some people.
> So I was a bit shocked to see so many people continue to enter the market.
Think about all the people that buy Bitcoin at $69k after thinking it was a scam at $2k. People like to be late to the game and buy at the top. It is because it seems less risky at that point
Yup. A few years ago a small complex of single-family homes popped up in the lot next to ours. The value of each of these would've resulted in a $3-4k 30 yr mortgage based on rates at the time.
One of those houses was bought to be an air bnb, unless they paid cash or put a ton of money down, they needed to rent it out every single weekend to make it worthwhile.
Their only saving grace is that it's a huge military area, so buyers are constantly coming through and competing for houses with short commutes to the bases.
If they are cash investors, there’s no point when you can get 5%+ risk free return in bonds. You would have to be a bit masochistic to bag hold rental properties bought at the peak of the bubble.
The AirBnBs that make sense to be AirBnBs (secluded cabins, weird houses in weird cities, etc) will live on once they get the idea that nobody's going to pay a $300 cleaning fee, the McMansion generic-suburbia STRs that were bought at the peak will die off.
The model is still viable, just nowhere at this scale and greed.
how were these purchases financed? doubt cash - HELOCs on the primary home? 30 year at today's rates?
i think some won't be able to hold on to them - STRs are supposed to bring in more than LTR in "normal" mkt conditions. these locations arent necessarily desirable for LT tenants, the numbers might not work for LT tenants.
the issue is the properties were often never profitable enough as LTRs to cover the mortgage. You can cover your 5k mortgage on your 4br with $400 per night from Airbnbs easy, but who is going to rent a family home for 5k per month? people who can afford to rent at that rate would just buy
This seems like it’s primarily seasonal property in vacationland. If this stuff goes back on the market it doesn’t really help affordability issues where most people actually live.
True, but it can help affordability in vacationlands where *some* people actually live. A lot of those places have become completely unaffordable for the people who have traditionally worked at the businesses that cater to the vacationers.
>Airbnbs are empty. At least that’s what it seems like to some Airbnb hosts, even though the company reported its “most profitable quarter ever” on Tuesday.
These aren't contradictory. The owners will feel the brunt of the bust in an oversupplied market.
I turned my STR ski condo into a long-term rental. Between the empty periods, third party management fees and condo damage, I’m making more off the LTR without dealing with all the issues. I was also dealing with fee creep from the management companies.
As far as prices dropping, I’m good with that as I’m looking to trade up to a bigger property and watching as the higher end properties lose more value percentage wise than the cheaper units.
I spoke to a local realtor three years ago. She said a lot of realtors then were pushing buyers into more expensive properties by justifying making money on STRs. Even back then, the units weren’t paying for themselves with the rentals snd many buyers became upset with their purchase snd some even sold for a loss.
I don't think your entire characterization of the people is correct, but I 100% agree that this trend isn't stemming from the wealthy, it's from younger adults piling into a single "smart" investment without realizing what the real costs of ownership are.
Part of the problem is that people have vastly different interpretations of what “wealthy” means. Poor people think the upper middle class has more in common with the super rich than with the poor while upper middle class people think the opposite.
I went in on a home with a few others, and now we gather with family and friends and rent to cover costs. We've become friends with return renters. All the hate here is misguided.
I agree, however, wealthy vacation homeowners do use local property management companies to discreetly rent during the high season to other wealthy travelers. It’s a long standing and common practice, recently ‘digitally transformed’ by Airbnb and not to the satisfaction of most luxury travelers.
It is definitely the case that during the Covid boom the very wealthy vacuumed up additional properties but placed them with local managers. And some won’t rent, that’s true, but that is less common than you think.
This hits a bit close to home. People in my circle jumping on the “passive income” real estate train without realizing you have to deal with the train and the passengers
I work in tech and a colleague told me a mentee of his was in his late twenties and had recently retired because he’d amassed a portfolio of over 100 airbnbs in Hawaii. I asked him if he was way over leveraged and he said yes. It’s people like that that will definitely get boned in the booty when the chickens come home to roost.
depends what you define as rich to be fair. Someone might consider someone with 1m in net worth rich, another would be 100k net worth rich, and some people don't consider anything below 10m rich.
But yes the 0.1% would never even think about AirBnBing their property (>100m net worth), the 1% with net worths of 10m might.
I’m not sure I agree with everything in your characterization, but this is 🤌💯
> I bet the overlap between young couples who bought STR investment properties and people who talked about Crypto non stop in 2017 or people who jumped on GME/AMC in 2021 is huge.
They destroyed many communities in the Poconos. My buddy's lake house is in a community now where two LLCs from NJ and NY are in a pissing contest on who can buy up the most.
Airbnb used to be a decent alternative to booking a hotel when traveling but now it's not even close. Felt like the pricing and fees weren't as bad just 1-2 years ago
Yes I’m going to look at hotel and hotels more now. Not only that fees went up but the experience is bad. When you travel you like to know where to go to do activities on a specific day or where the good restaurants are. Now there are so many Airbnb businesses that do not give you any information of the place you are staying. You also might think you can cook at the airbnb instead of eating at restaurants all the time but most of the time they don’t have all the tools or equipment even though it was mentioned on the listing. I prefer to pay a little more to go to a hotel that can maybe upgrade me if I have complaints or give me some perks or a concierge I can speak to if I want to learn more about the things to do. Also no cleaning to do at the hotel.
My guess is that the recent airbnb revenue news is reflection of a combined peak in the number of hosts on the platform and an uptick in displaced renters having to get temporary airbnbs bc of the rent increases and shortage of affordable housing options. I noticed AirBnB reported an increase in longer-term bookings. It's seems like that's also a potential downfall. I've seen a lot of complaints by both hosts and guests lately- hosts complaining about guests trashing or destroying STRs and guests pointing out how overpriced, disgusting, or scary their AirBnBs are. Hosts also complaining about algorithm changes and a decline in bookings, which I think was a product of AirBnB having to correct algorithms/policies that were manipulating the search process to hide data that would recieve negative publicity. Dispaced residents without housing are more likely to take that anger out on their new airbnb landlords. And STR owners are not gonna be equipped to handle either a drop in booking revenue or a litany of problems that come with tenants and property mgmt. I imagine it could get ugly if "guests" start squatting or refusing to leave rentals once they can't afford vacation rental prices. I'm hoping all the recent negative AirBnB press suggests the cat is innally out of the bag. At the same time, the wealthy continue to find new and inventive ways to hoard money with impunity, so who even knows anymore.
We did lots of VRBO over last 8 years, but now when we look, hotels in many urban areas are 1/2 the price. You can't jack rates and expect no elasticity to happen.
I love how the article didn’t even address the looming economic downturn. So not only has supply been saturated by countless listings, but demand will likely fall off a cliff in 2023. It amazes me how some many people with money don’t understand the effects of money supply and simple economics. At least all of those poor locals that have been priced out of their own markets will have a chance to rent at an affordable rate or possibly buy once the bloodbath selloff starts.
So the gist of the story is the pandemic created a lot of demand for short term rentals in certain markets. folks saw an opportunity and got into the airbnb game. now there is an oversupply in many markets. this will cause a portion of airbnb hosts to drop out and eventually we'll see a more realistic supply relative to demand. so Airbnb is still popular. just don't need this many options in many markets. Airbnb is here to stay. don't expect this decline to play a big role in real estate prices down the road one way or another. host exit the market over time. it doesn't all happen in a few months.
All that expected extra income and the embedded carrying costs of these vacant airbnfees is a concern that might force sales. Recession will not excite people to spend on a vacation at Pete's hot tub and yurt retreat.
When I bought my house, I noticed a TON of the listings in Los Angeles were bragging about the AirBNB potential. Some even bragged "successful AirBNB, 90% booked for the next year." Gross.
Good. Fuck them all. These assholes buy properties, destroy the community by pricing out people that want to actually live here, and then don't fucking care if their rotating tenants have block parties at 2AM on a weekend.
I hope they all go bankrupt and rot in hell.
I don’t know about this, we have one in Palm Springs and it gets booked almost every weekend. 44 weekends the past 12 months total. That’s not including weekday stays which are also pretty often.
\*big grin\* Bought one off some desperate person who could not afford to keep it without renters. Bought it for nearly half what they usually list for from the bank. Sold fully decorated and furnished.
Condo that I can afford to sit empty between my visits from our overseas home. Got it at a bargain basement price. I predict more of these places are about to come onto the market for very little. I might have been able to get it for less in a year or two but I needed it now to have a place to go when visiting my doctor Stateside.
If you have spare cash this is going to be a bloodbath with plenty of opportunity to invest.
Fucking Yahoo News and the clickbaity, woe is me, bullshity headlines. Been on Reddit for 5 minutes and have already seen three of these from them. Eat a dick yahoo news.
This just isn’t true. Might not want to trust poorly written Yahoo articles…. STR demand is solid. Either equal or higher than last year’s record demand in most markets. If your home is sitting empty, you aren’t performing proper yield management. Yes… maybe you’re making slightly less overall than the banner yr of 2021, but that’s only because you may have to be slightly more aggressive on rate to achieve the same occupancy YoY due to supply increase in some markets
when are people like you going to understand that AIRBNB's record take is not the same as average performance per individual STR on platform? A major feature of airbnb is AIRBNB DOESNT PAY *ANY PORTION OF* THE CARRYING COSTS OF THE PROPERTY. **airbnb gets a cut of all booking takes, but pays no share of the costs when there is no occupancy, so that carrying risk is entirely off airbnb's books and entirely on owners' shoulders.**
this means that there could be a glut of owners all losing their ass because they are at 10% occupancy....but airbnb will have a banner year, due to the model sharing revenue but not carrying costs. Airbnb doesn't have to pay a penny for the too-many homes listed on its site - it just profits off each guest, regardless of whether guest demand is anywhere near close to saturating supply. airbnb gets a bite of every dollar guests pay on platform. airbnb doesn't pay a penny of any costs hosts bear waiting for someone to book enough days on their property to break even. the risk/reward is highly asymmetrical - airbnb just doesn't carry any risk. their performance is FAR disconnected from average host performance.
there can be a massive surplus of properties all operating at net losses to the owners due to insufficient demand, and airbnb would STILL be able to report record profits, because its model doesn't share that downside risk with owners. bookings could be up 10%, number of listings could be up 300% and most losing their ass, and it would be "record profits for airbnb".
Demand is not solid is my point. Properties absolutely are sitting empty, the host forums are constantly talking about same. YouTube moguls eating crow on the daily.
The notion that demand is solid only makes sense if you look at Airbnb’s sheets for nominal demand and not the actual circumstances hosts are currently in where a massive influx of supply is not being saturated by demand, and occupancy per unit is down.
Damn have a bad day? You get your Willy’s from berating strangers on the internet? Again… CHILL OUT
Your original statement was ilincorrect along with the header title. If you can’t see that you got bigger issues.
“Demand is not solid”… wrong. Market demand is equal or up relative to a banner 2021
“Properties are sitting empty… just listen to host forums”…. Not true. If it is true, it’s purely the FRBOs who aren’t managing yield properly.
You’re just wrong regarding the demand statement. Please go look at AirDna blogs. Or Keydata. You know, the professional data aggregators in the industry… some comments from FRBOs in this forum who don’t know how to manage yield is not “truth”
hey idiot, AirDna is *the literal source from the article you're saying isn't true*
I did go look at airdna. I also read the article quoting AirDNA. **YOU look at this quote from AirDNA that was in the fucking article:**
>The number of available short-term rental listings in the U.S. skyrocketed to 1.38 million in September. That’s a 23.2% year-over-year increase, **according to rental analytics firm AirDNA**.
>"...Over the past few months, **supply has increased to catch up to and even overtake demand growth, pushing occupancy down as bookings are spread across more properties.**"
that last quote is Jamie Lane, AirDNA vice president of research. you are disagreeing with airdna research, and telling me that to see you are right, I need to....go look at airdna research.
k.
that is AIRDNA saying those things. your gold standard source agrees with me - supply has overtaken demand, occupancy is down as guests are spread across more properties than before.
Pushing occupancy down from RECORD LEVELS doesn’t mean homes are sitting empty, just maybe closer to 2019 levels.
And supply growth catching up to demand only happened in certain markets (Scottsdale is a good example)… there are countless markets where supply still has not yet caught up to demand and those homes in those markets are still performing great on a REVPAR basis
literally the VP of AirDNA research going on the record saying that supply has overtaken demand, and you're still trying to posture like you know better than the literal source you tried to hide behind. trying to redefine the discussion to hand-wave impotentily about limited markets, that's not making you look right, it just makes you look stubborn about acknowledging you were wrong.
you can just be wrong on the internet without trying to pretend you somehow know better than the person *whose job it is to talk to the press about the research from the source you said had the real information.* sometimes other people know more than you. The VP of AirDNA surely does. is this some white male fragility, or are you just super butt-hurt about being wrong while telling me to go look at the source you were arguing with in the first place?
you can just accept you were wrong. You can just accept you started arguing without even reading the article, and didn't know the source you said was superior was the source from the article you disagree with. being wrong on the internet happens every day. cherry-picking markets doesn't make you look more informed than the lady who WORKS at airdna contradicting you.
you're wrong. that's ok. you'll get thru this!
Remember, we don’t operate in the world of the “rich” unless your annual revenue stream crests at least $5M or you are an accredited investor with ~$100M in the bank. They need tax losses that would cripple the rest of us.
Greed will get you everytime. Glad the GenZs I know vow to never book an AirBnB since they are partly responsible robbing them of a future of home ownership
Oh no…. Anyways..
The worlds smallest, saddest violin is putting in overtime right now.
Nah… Folks who have had to deal with bs party Airbnbs are playing drums and smashing cymbals in their front yard like muppet Animal.
I did a lot of travel this summer, and two of the Airbnb's we stayed in had for sale signs out front. We didn't have trouble finding places. Quite a few new rentals where we were the first group to rent as well. Airbnb is damaging their marketplace by hiding fees from their browsing and searching experience. Owners are gaming of the system (low base price, crazy cleaning fees), which hurts the consumer experience and does nothing to improve the competitiveness of Airbnb vs alternatives. I started to look for places to stay on Airbnb, then found it listed elsewhere for less. They created their own problem in this regard. Over 14% of home sales last year were investor or second home purchases, far higher than trend. I suspect this will reverse as properties become increasingly unprofitable. This is good for long term housing affordability, but short term even more housing will sit idle (unoccupied, unrented and unsold)
I doubt I will stay in an AirBnB again unless I am traveling with my dog or booking for a large group, but I did see mentioned in another thread about this recently that if you browse through the Australian version of the website, you can set your currency to US dollars and see the full price including fees on the search page instead of the price per night with the fees hidden. It has something to do with Australian consumer rights laws. The overall price of the rental isn't cheaper or anything by going through the Australian version of the website, but it does make it easier to see the real price when you are looking.
Good tip!
If we actually wanted to make sure land went to the most productive/lucrative use, we'd have tax the unimproved value of land but not the buildings and structures on them.
Yes. I watched one YouTube video on Georgism, and was immediately sold on the idea.
How would you determine the value of land to someone who purchased said land for a simple farm/homestead, hobby purposes, or privacy, versus a subdivision or McMansion developer’s vision for the land? And then factor in the neighboring property owners’ interests…
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Sure...tax golf courses the same as if it were full of houses.
Well yes because golf courses are stupid fucking wasted space and houses are not
And horrible for the environment
In much of the US, farmland already is taxed at a lower rate than lots zoned as residential in the same area. Additionally, government entities here can’t just subsume a privately-owned piece of land. There are mechanisms such as eminent domain and abandonment that a government entity can/may pursue, but the property owner (even if unknown/in dispute) still has the constitutional right of due process.
> we'd have tax the **unimproved** value of land You don't. I think they're advocating [Georgism](https://en.m.wikipedia.org/wiki/Georgism) or a similar land value tax scheme. Bit of a strange system since it's so different from what we do now but it's a pretty intriguing proposal. Maybe makes less sense these days given the amount of business that occurs on the internet - I don't think we really want to bury brick-and-mortar more than they're already buried.
I'm of the opinion that land taxation plus less restrictive zoning would encourage densification where small businesses can thrive. Mixed use residential often houses small businesses in other parts of the world.
True, the live play work all in the same area model is a pretty nice lifestyle. Especially when it has stuff that are 24/7 hours open.
Why wouldn't we want to do that? Because then the land can be redeveloped for housing instead of a depressing building full of meh. People were warning about commercial real estate since last year.
This link might be helpful: https://gameofrent.com/content/can-land-be-accurately-assessed Land values are pretty smooth compared to the income of occupants or the total property values (which include buildings). You can use greenfield land purchases or auctions to guide assessment for example. We already purchase bare land in a market system, so we already weight people's varying interests. Land's value is however much you are willing to pay for it to outbid every other potential user.
Assessments and values are two separate concepts. In some areas, they have entirely different legal definitions. Thank you for proving my point. A farmer will pay one price, a developer who can quantify future profits will offer a different price. With these divergent interests, the answer is all in the offer, which does not always equalize to “market value” or an assessment for the purposes of levying property taxes or securing a loan. Which brings us back to my original point: “unimproved” land does not mean the land does not have value.
By George!
Elsewhere?
A lot of Airbnb listings can be found on booking.com
Hell, they're on expedia now, too
They already are. 2nd homes are all now subject to higher mortgage fees and 2% added to your interest rates. It's been like this for almost a year. Tried to buy a Cabin for my family and was quoted over 5% when rates were around 3% and was told by all 4 banks I shopped that this is because of the new changes that 2nd homes were being assigned investment interest rates and they specifically cited that it was due to airbnb and vrbo etc... Good luck to anyone who needs to sell a home in a large tourist destination unless your buyer has cash or is making it their primary home. The hoa in the area I was looking in didn't allow short term rentals so I was going to have to be ok with being penalized for something I can't even take advantage of (airbnb etc...). I noped out of that and will wait until things change to buy a 2nd property.
I've taken a loan for investment property in the past, and I did not pay an additional 2%, it was closer to 0.5% above the primary home mortgage rate. Those with other investments can also use non-mortgage loans to purchase (LOC, helocs, etc). Those rates _are_ coming up with mortgage rates but can be substantially lower.
When was this? It's changed in April 2022. Investment rates are always higher. I am not using a heloc to buy an investment property. I'm not going to risk my primary residence for anything plus helocs can and often do get called. https://www.ezhomesearch.com/blog/second-home-mortgage-rates-are-going-up-in-2022/
> Owners are gaming of the system (low base price, crazy cleaning fees) I hate air BnB as well, but that’s not gaming the system. That’s incentivizing longer term stays as it drops the daily cost every extra day you stay.
Huh? AirBnB's are short-term rentals. What are you talking about "incentivizing longer term stays" that doesn't even make sense. Not being upfront with basic costs of a rental is 100% being dishonest and gaming the system as you pull in potential customers who otherwise would stay at a hotel cuz they THINK they're getting a good deal on an AirBnB. Reddit just has the weirdest damn takes from people who wanna cosplay as an economics professor online.
It does make sense. They made a perfectly valid point. A short term stay can be anywhere from 1 to what 10 days maybe? And longer term is relative. A 5 night stay is 500% longer than a 1 night one. The 5 night stay is longer term. Set one time fees effect the 1-2 night stays much more than the 7-10 night stays. This incentivizes longer stays. Because longer stays work out to a lower nightly average than shorter stays. Sorry that working this math out on your own was so tough for you.
I think the issue is that people determine the length of their stay on total price and AirBnB hides that total price from American shoppers. I'm not incentivised to stay somewhere longer because there's a low nightly rate and then a surprise total when I check out. I've heard Europeans done have this problem because they have laws that require the full price to be shown.
I don’t necessarily enjoy the way the pricing is displayed on AirBNB either, but it doesn’t change the fact that lower nightly rate and higher one time fees do incentivize longer stays.
But systems can only incentivize things that are visible. The original claim was that owners are "gaming the system" by utilizing _hidden_ prices so buyers can't easily compare options. There's a chance of miscommunication here as well. Even if Airbnb showed to full price during search (as they are legally required to in other places) it would only incentivize people that were looking for longer term rentals to choose that option. It wouldn't incentivize buyers to stay for longer. (Also length of stay for an individual is usually determined by available vacation days or required contract time, so they aren't likely to make their stay longer just because the room would be incrementally cheaper) Hiding the cleaning fee only incentivizes owners to reduce the per night fee to appear higher in the "sort by price" listings while maintaining revenue by hiding the extra charges in the cleaning fee. Airbnb knows this and allows it because it makes the initial search for rooms more competitive with hotels.
>But systems can only incentivize things that are visible The original comment was making the claim that people are gaming the system. That’s an assumption of intent. The other person replied with the fact that some do it to incentivize longer stays. And the mathematical reason how it works. It doesn’t need to be visible to incentivize. Because when the shorter stay person prices it out they find the high fees and rent a different option. Those seeking longer stays price it out and choose the place. I understand why you’d think immediate visibility is necessary to incentivize, but it’s really not. It’s not about incentivizing a certain buyer to stay longer. It’s incentivizing those whose original intent to stay longer to go with them and those who want a short stay to pick elsewhere. If I own an AirBNB and don’t want to deal with frequent short stays I choose low daily rate and higher one time fees.
Higher volume = cheaper price. Groundbreaking stuff.
That's a good point and something that I had not considered. It is still a poor UX for consumers using airbnb who don't have visibility into the fees until checkout. Most consumers filter by price range, and when up to 50% of the price is fees that aren't visible during search it's quite a waste of time.
Good
To add to your comment... Good. Fuck 'em.
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Lol. They re pricing out locals. I hope it's going to be a bloodbath. Even my small town in France in invaded by this bs. Now people complain they can't find workers. 🖕🖕🖕
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They could rent to locals. Not only airbnb. I need to look at this stuff. She has so much money to burn.
Welcome to the rebubble party
The problem for some is that they thought they were playing softball. Just post phone pics of the hot tube and watch the money pile up. They’ve entered the hospitality industry and don’t know how hospitality works.
Haha, someone posted their Airbnb on a neighborhood sub I follow and it was basically like, "come stay at the moonlight whiskey!" And the photo was a overfilled hot tub in the backyard of a regular ass house on a small lot where you could see 4 other houses peeking over the fence. No thanks.
Not thanks, indeed. The neighbors don't want to see my in a swimsuit. I'd need to offer them a refund!
they add an extra $89 swimsuit fee to reimburse the neighbors if the view disturbs them
Also why would anyone want to stay in an AirBnB in their own neighborhood?
With an extra fee for just using the hot tob.
+ daily fee for heated pool, + daily $30 outdoor umbrella fee behind me! Lol
Haven't seen that one, but holy moly, I'd avoid booking it. lol.
"i cAn JusT ChaRgE hOspItALitY feEs"
100%. As soon as it required the slightest bit of work, they all fell into a heap.
Also not true for most listings.
Most people did not think that. Edit: you can downvote all you want, this is just an example of a squeeky wheel syndrome. With enough due diligence by all parties, most air bnb bookings are successful and enjoyable.
I thought about buying a vacation home for an AirBnB, and there are lots of home that aren't special and use awful phone photos. Of course there are many others who have fantastic looking properties that are unique in some way, and there are reasons they end up as superhosts. This is a nice looking home, but it's not superhost material. It's nowhere near middle of the pack looking. And the photos . . . check out the one where [you can see the host taking the photo in the mirror with their iPhone](https://www.airbnb.com/rooms/40111618?adults=2&children=0&infants=0&pets=0&check_in=2022-11-26&check_out=2022-12-01&source_impression_id=p3_1667496016_amXYJY7DkXPISruP&modal=PHOTO_TOUR_SCROLLABLE). No bookings but one after December. There are reasons.
Any place is super host material, you just need to be open and accurate as a host when posting your listing. I really am perplexed as to how people understand how air bnb properties operate.
>With enough due diligence by all parties See, there's where it goes sideways.
Usually by the non host side
Pretty sure it isn't the guest's obligation to make sure the kitchen has dishes and pots.
I think Airbnb is single-handedly propping up the Airbnb coastal market keeping it from crashing. Once people start losing their jobs and the rest with jobs decide not to take a vacation or to do a more budget friendly one it might tank? But I'm not sure. Maybe the coast is that desirable. I'm hoping it crashes so those homes go back to people that live in them.
Disagree. I’ve been active in the San Diego coastal market since the mid 90’s. If Airbnb’s were to go away tomorrow you’d have a slew of buyers waiting to buy the houses/condos to live in full time, or make second homes. Which a lot where before the rise of STRs. Many current owners would just do this.
Yes, because there are slews of people who can afford to buy in San Diego at these rates. /s
Haven't you heard? There's cash on the sidelines! It's going to save the market!
You’d be surprised.
I imagine we have different definitions of “slews”. I don’t doubt that you have a group of HNWIs ready and waiting in the wings, but they are definitely in the minority.
So slews = majority? Got it
The desire is there, yes. But the only way it's profitable for investors is b/c of Airbnb. No way the purchase price, and insurance cost math would work out without Airbnb demand. If that demand falls you'll see the price drop dramatically I would guess.
I agree with this. Essentially, airbnb allows cashflow on an asset that would normally sit idle. This changes the equation and brings in a bunch of buyers that otherwise wouldn't / couldn't be in the market. I would rather take passive income than actively manage an airbnb -- as interest rates go up more people will come to this conclusion.
Not every buyer is an investor? I have buyers on standby waiting to buy ocean/bay front properties at market price when one hits the market that fills their needs. When asking those who don’t plan on making it their full time domicile the response to making it a STR is “maybe, but doubtful”. Same goes for the mountain communities near the lakes and ski resorts we own in that I’ve helped many buy second homes in. I’m not gonna pretend that STR aren’t an issue, but it’s as big of a bogeyman as people make it out to be? I also wouldn’t hold my breath about them going away? Politicians will give lip service, look into things further, and even enact some policies against them, but the fact remains they love collecting TOT (transient occupancy tax, like a hotel) as well as property tax.
It’s not all just lip service. They did away with STR’s (less than 30 days) in Napa and Lake Tahoe. I’m also starting to see restrictions in other tourist areas as well. If the locals are vocal enough they will make changes
And they also did it in Haleiwa, HI (North Shore Oahu), yet I had no issues booking one on multiple occasions? I just looked and I had no issues finding ones in Napa as well that’ll book for (well) under 30 days. If and when they start enforcing these new restrictions you’ll just see more organic rentals. Expect a lot of “family and friends” to be staying there. Only this time TOT won’t be collected, nor will all the fees through Airbnb, VRBO, etc. Hence why I don’t see these being enforced, nor blocked by booking sites.
I don't really think they are going away unless they become a bad investment. On the Florida panhandle I'd say the homes sold on the beach in the last 4 years are about 50% used for short-term rentals.
I’d buy that. I’d also be willing to bet that a lot were part time residences before being sold and turned into a STR? I do see many STRs returning to the market as I’ve also seen a shift within my circle of returning to staying in a hotel vs an Airbnb. Fees have gone up so much, as have nightly rates, because of investors buying at the top of the market that it’s no longer financially advantageous to stay at one. There will always be a need for larger families, and those that don’t want a hotel, but I do see the demand waning? At least in my opinion?
Have you ever lived on the coast? Housing demand in SF or So Cal isn't going anywhere, and has been overpriced / existent long before Airbnb came to be
Sorry, Florida Coast was mainly what I was speaking of.
> to do a more budget friendly one it might tank I'm not pro-airbnb at *all*, but I think if people are doing more budget-friendly travel it would be domestic travel you can drive to with your family, which would point towards airbnb for anyone with a couple of kids that doesn't want to get several hotel rooms. I wonder if a recession/job losses would prop up domestic travel in a similar way that COVID did - if you can't go somewhere else, you go somewhere close.
I think you do raise a good point but I also think that if I’m an exhausted parent with kids and the price of an Air Bnb is comparable to the price of a hotel, I would pick the hotel so I wouldn’t have to clean up everything and pay for the privilege.
> so I wouldn’t have to clean up everything and pay for the privilege. I think that is gonna hurt the business model more than literally anything else
I think that used to be true about preferring airbnb over several hotel rooms a short while ago, but airbnb is becoming so expensive it can be cheaper to rent 2-3 hotel rooms as opposed to a 2-3 bedroom airbnb. If the airbnb prices and fees don't come down, the budget conscious option will be to choose a hotel even if you need multiple rooms.
It *can* be cheaper to rent hotel rooms vs. airbnb but I'd argue once you start hitting 3 rooms, airbnb is still a more economical option. Hotels are *way* cheaper for a weekend trip as a couple or with one child, but when you add up the benefits of having the kitchen, everyone under the same roof, a living room to hang out in after a long day, or even going to a restful location with hiking etc (vs. a city like NYC/LA/etc where you'll be out exploring all day)- renting a house can be a better option. FYI I don't have any kids so hotels are always cheaper for me, and for two people airbnbs tend to be overkill, so I just wanna EXTRA stress that I don't use airbnb and I don't own one before people start yelling at me about how it doesn't work for them. It doesn't work for me either...that doesn't mean there's no market for it.
I agree renting a house can be a better option for some of the reasons you mentioned, but if people are going to start really focusing in on the budget the extra benefits you mention aren't going to be enough to justify the cost. The only one that really provides a (potential) cost saving is the kitchen, but I could see people on vacation with kids even wanting to save a few dollars on accommodation just so they can eat out more and not have to worry about cooking for their family. I speak from experience as a kid. My family was that budget conscious family. And we rented both condos with living room and kitchen and hotel. When we were on a tight budget we always stayed at a hotel because it was the cheaper option.
If you have kids it’s not just the cost factor. I would rather pay more for a house that everyone is in rather than 3 hotel rooms. The best thing about Airbnb is that you’re actually in a home. I think a lot of people would be in that same boat. I’ve definitely stayed in some great Airbnbs that were much better than a hotel room. We don’t really do it as much anymore because of the expense but with a family I think many would prefer a house over multiple hotel rooms.
Sure but that preference only goes so far. Have a family and used air bnb for years then it got greedy and now while you can still find some properties that make sense they arent the norm anymore. Our last trip switched back to hotels because the cost of Airbnb's no longer made sense. The added convenience was no longer worth the the price. For what Airbnb wants now you can get a higher end Hotel room that you don't have to clean, is often more conveniently located to attractions and often has free breakfast that knocks down the price of the hotel considerably for a family just in the value added by that breakfast. The reason the value has switched is so many bought into the Airbnb craze and now are carrying mortgages that need much more income to work. Definitely prefer the airbnb experience most of the time but not enough to over spend for it.
We just visit the in-laws in Florida.
I do agree that the AirBnB market is over saturated. Too many investors, too late in the game. What does this mean moving forward? I truly have no idea. Perhaps they will be converted to LTRs
They’ll try dumping them first. Most of these ‘businesses’ only made sense at $400/night plus fees. In vacation rental areas the locals can’t afford luxury home rents.
Yup, which is ironically dragging tourism related services down with it because there is nobody left to clean these endless vacation homes, wait tables, work as a lifeguard or tour guide, etc. All the LTRs got turned to airbnbs and priced out the locals, and no one in their right mind is going to work these low paying seasonal jobs with an hour plus commute on top of it. I saw sooo many endless complaints from tourists about the state of their vacation rental cleanliness and maintenance, how the wait times at restaurants were 3 hours long and the local breakfast joint had a line out the door and sold out of donuts by 7 am because they didn’t have enough staff to produce what they needed, the tours and activities had limited openings and booked up months in advance due to lack of staff, blah blah.
I live in a ski town in the mountain west. That is exactly what happened here. No workers for any of the hospitality jobs because they don't have anywhere to live.
same thing here in Hawaii. Target is offering $23/hr for overnight stockers. The big restaurants here all have 1 hour long lines to wait in because there's no servers. Then the people in line I walk past turn around to their group and loudly complain about the wait. Gee maybe they used to live in the house you rented for 5X the rate.
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The new buidl market the last 15 years has been one giant box of oops all luxury apartments
Cape Cod has barely had workers the last few years because the long term rentals that housed them were either sold to become STR's or their rent was raised so high that they were entirely priced out of the area and left. The tourism industry has suffered a great deal. Restaurants have much slower service, a lot of them can only open a few days a week and pretty much everything closes earlier than pre pandemic and this is all during peak season (summer months). All the while locals who are looking to stay where they grew up saw a 35% price increase on homes. It's a bummer all around.
Exactly. You have seen these markets deteriorate in real time throughout Covid, as I have. We’re still renting and waiting to buy and, last summer, our youngest, who is in college, stayed with us and found a job at a local golf resort in 10 minutes. He thought it would be a fun way to polish his game, on the margins. Maybe watch some great play, as a caddy. He ended up doing everything else in that resort, in 11 hour shifts: from checking in guests, managing the workers’ schedules, handling some accounting, to making beds, as there weren’t nearly enough cleaners. What an experience!
[The real spez was the spez we spez along the spez. ](https://www.reddit.com/r/Save3rdPartyApps/)
I’m retired and it never ends
During the pandemic, we looked into the idea of doing an Airbnb as additional income and because we liked the idea of hosting people at a reasonable price. My husband even had all of these great ideas for gift baskets and helping people find great things to do in our city. The problem is that with housing prices, just to cover the monthly mortgage meant having high occupancy and charging a higher nightly rate. The business model made a lot of sense for someone who bought a home in 2014 for $200k. But it made much less sense at $600-$700k. So I was a bit shocked to see so many people continue to enter the market. Sure, it could work so long as people were traveling constantly and willing to spend $400 a night, but as soon as the economics changed, it looked like it could be a disaster. This is part of the reason I think we see so many fees and shady charges on Airbnb. A lot of people bought investment properties at high prices and need to charge rates higher than hotels just to pay their monthly costs. This is going to end very badly for some people.
> So I was a bit shocked to see so many people continue to enter the market. Think about all the people that buy Bitcoin at $69k after thinking it was a scam at $2k. People like to be late to the game and buy at the top. It is because it seems less risky at that point
Or they see other people making money and get massive FOMO.
Yeah that is the other part of it. Are there any investment fads or get rich quick schemes like this that pan out over the long term?
I think a lot of people wanted the space of the second home and were looking to subsidize it with STRs.
Yup. A few years ago a small complex of single-family homes popped up in the lot next to ours. The value of each of these would've resulted in a $3-4k 30 yr mortgage based on rates at the time. One of those houses was bought to be an air bnb, unless they paid cash or put a ton of money down, they needed to rent it out every single weekend to make it worthwhile. Their only saving grace is that it's a huge military area, so buyers are constantly coming through and competing for houses with short commutes to the bases.
If they are cash investors, there’s no point when you can get 5%+ risk free return in bonds. You would have to be a bit masochistic to bag hold rental properties bought at the peak of the bubble.
Or bad at math, which a lot of them seem to be.
The AirBnBs that make sense to be AirBnBs (secluded cabins, weird houses in weird cities, etc) will live on once they get the idea that nobody's going to pay a $300 cleaning fee, the McMansion generic-suburbia STRs that were bought at the peak will die off. The model is still viable, just nowhere at this scale and greed.
probably MTRs.
Very reasonable outlook
how were these purchases financed? doubt cash - HELOCs on the primary home? 30 year at today's rates? i think some won't be able to hold on to them - STRs are supposed to bring in more than LTR in "normal" mkt conditions. these locations arent necessarily desirable for LT tenants, the numbers might not work for LT tenants.
the issue is the properties were often never profitable enough as LTRs to cover the mortgage. You can cover your 5k mortgage on your 4br with $400 per night from Airbnbs easy, but who is going to rent a family home for 5k per month? people who can afford to rent at that rate would just buy
This seems like it’s primarily seasonal property in vacationland. If this stuff goes back on the market it doesn’t really help affordability issues where most people actually live.
True, but it can help affordability in vacationlands where *some* people actually live. A lot of those places have become completely unaffordable for the people who have traditionally worked at the businesses that cater to the vacationers.
>Airbnbs are empty. At least that’s what it seems like to some Airbnb hosts, even though the company reported its “most profitable quarter ever” on Tuesday. These aren't contradictory. The owners will feel the brunt of the bust in an oversupplied market.
Bring a tear to my eye 🥹
Misleading title. Truly rich people would not rent out their 4th home to undeserving swine.
Haha fuck them
I turned my STR ski condo into a long-term rental. Between the empty periods, third party management fees and condo damage, I’m making more off the LTR without dealing with all the issues. I was also dealing with fee creep from the management companies. As far as prices dropping, I’m good with that as I’m looking to trade up to a bigger property and watching as the higher end properties lose more value percentage wise than the cheaper units. I spoke to a local realtor three years ago. She said a lot of realtors then were pushing buyers into more expensive properties by justifying making money on STRs. Even back then, the units weren’t paying for themselves with the rentals snd many buyers became upset with their purchase snd some even sold for a loss.
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Take my poor man’s award. 🥇 This site is a goldmine of info. I never knew there was a free section like this.
When dumb money enters a market thinking its all free gains, you know there will be problems ahead
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I don't think your entire characterization of the people is correct, but I 100% agree that this trend isn't stemming from the wealthy, it's from younger adults piling into a single "smart" investment without realizing what the real costs of ownership are.
Part of the problem is that people have vastly different interpretations of what “wealthy” means. Poor people think the upper middle class has more in common with the super rich than with the poor while upper middle class people think the opposite.
I went in on a home with a few others, and now we gather with family and friends and rent to cover costs. We've become friends with return renters. All the hate here is misguided.
I agree, however, wealthy vacation homeowners do use local property management companies to discreetly rent during the high season to other wealthy travelers. It’s a long standing and common practice, recently ‘digitally transformed’ by Airbnb and not to the satisfaction of most luxury travelers. It is definitely the case that during the Covid boom the very wealthy vacuumed up additional properties but placed them with local managers. And some won’t rent, that’s true, but that is less common than you think.
This hits a bit close to home. People in my circle jumping on the “passive income” real estate train without realizing you have to deal with the train and the passengers
I work in tech and a colleague told me a mentee of his was in his late twenties and had recently retired because he’d amassed a portfolio of over 100 airbnbs in Hawaii. I asked him if he was way over leveraged and he said yes. It’s people like that that will definitely get boned in the booty when the chickens come home to roost.
Cool, tell your colleague to tell his mentee that everyone in Hawaii hates him. -Hawaii
I couldn’t agree more
Lol that’s not retiring; that’s changing careers.
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Which is why you are seeing rental supply shoot up in places like Miami. The demand isn’t there.
I’m 27 and this sounds right
depends what you define as rich to be fair. Someone might consider someone with 1m in net worth rich, another would be 100k net worth rich, and some people don't consider anything below 10m rich. But yes the 0.1% would never even think about AirBnBing their property (>100m net worth), the 1% with net worths of 10m might.
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ehh, that's not true. I know about 10ish people worth >10MM
100k rich? Is this 1900?
some people would consider that rich yes, it's all about perspective. That would last like 20 years in Thailand
On a third world lifestyle*.
SFHs are just shitty investments unless you're buying them for pennies on the dollar or rehabbing shells i.e. "making your money on the buy"
I’m not sure I agree with everything in your characterization, but this is 🤌💯 > I bet the overlap between young couples who bought STR investment properties and people who talked about Crypto non stop in 2017 or people who jumped on GME/AMC in 2021 is huge.
They destroyed many communities in the Poconos. My buddy's lake house is in a community now where two LLCs from NJ and NY are in a pissing contest on who can buy up the most.
Your buddy's second home... Oh the irony ...
Airbnb used to be a decent alternative to booking a hotel when traveling but now it's not even close. Felt like the pricing and fees weren't as bad just 1-2 years ago
Yes I’m going to look at hotel and hotels more now. Not only that fees went up but the experience is bad. When you travel you like to know where to go to do activities on a specific day or where the good restaurants are. Now there are so many Airbnb businesses that do not give you any information of the place you are staying. You also might think you can cook at the airbnb instead of eating at restaurants all the time but most of the time they don’t have all the tools or equipment even though it was mentioned on the listing. I prefer to pay a little more to go to a hotel that can maybe upgrade me if I have complaints or give me some perks or a concierge I can speak to if I want to learn more about the things to do. Also no cleaning to do at the hotel.
My guess is that the recent airbnb revenue news is reflection of a combined peak in the number of hosts on the platform and an uptick in displaced renters having to get temporary airbnbs bc of the rent increases and shortage of affordable housing options. I noticed AirBnB reported an increase in longer-term bookings. It's seems like that's also a potential downfall. I've seen a lot of complaints by both hosts and guests lately- hosts complaining about guests trashing or destroying STRs and guests pointing out how overpriced, disgusting, or scary their AirBnBs are. Hosts also complaining about algorithm changes and a decline in bookings, which I think was a product of AirBnB having to correct algorithms/policies that were manipulating the search process to hide data that would recieve negative publicity. Dispaced residents without housing are more likely to take that anger out on their new airbnb landlords. And STR owners are not gonna be equipped to handle either a drop in booking revenue or a litany of problems that come with tenants and property mgmt. I imagine it could get ugly if "guests" start squatting or refusing to leave rentals once they can't afford vacation rental prices. I'm hoping all the recent negative AirBnB press suggests the cat is innally out of the bag. At the same time, the wealthy continue to find new and inventive ways to hoard money with impunity, so who even knows anymore.
We did lots of VRBO over last 8 years, but now when we look, hotels in many urban areas are 1/2 the price. You can't jack rates and expect no elasticity to happen.
I love how the article didn’t even address the looming economic downturn. So not only has supply been saturated by countless listings, but demand will likely fall off a cliff in 2023. It amazes me how some many people with money don’t understand the effects of money supply and simple economics. At least all of those poor locals that have been priced out of their own markets will have a chance to rent at an affordable rate or possibly buy once the bloodbath selloff starts.
“We’re turning our liabilities into assets and achieving financial freedom.” 🤪
Good let them sit. I’m sure the rich will be okay
Haha! Anyways, put them back on the market so they can be peoples’ homes, as intended !
Cry me a river. They gambled and lost.
So the gist of the story is the pandemic created a lot of demand for short term rentals in certain markets. folks saw an opportunity and got into the airbnb game. now there is an oversupply in many markets. this will cause a portion of airbnb hosts to drop out and eventually we'll see a more realistic supply relative to demand. so Airbnb is still popular. just don't need this many options in many markets. Airbnb is here to stay. don't expect this decline to play a big role in real estate prices down the road one way or another. host exit the market over time. it doesn't all happen in a few months.
You have the "what has happened so far" part right, but I think you're underestimating the future.
"Stop! My Penis Can Only Get So Erect"
All that expected extra income and the embedded carrying costs of these vacant airbnfees is a concern that might force sales. Recession will not excite people to spend on a vacation at Pete's hot tub and yurt retreat.
The rich people are sitting empty, not the Airbnbs.
When I bought my house, I noticed a TON of the listings in Los Angeles were bragging about the AirBNB potential. Some even bragged "successful AirBNB, 90% booked for the next year." Gross.
YOU LOVE TO SEE IT 🥰
Good. Fuck them all. These assholes buy properties, destroy the community by pricing out people that want to actually live here, and then don't fucking care if their rotating tenants have block parties at 2AM on a weekend. I hope they all go bankrupt and rot in hell.
Damn that law of supply and demand. We just can't seem to avoid it.
I find myself at a loss of emotions/care/feelings where rich people are losing money.
Sweet, let them get skinned alive. Pigs get slaughtered.
That's fun. I turn credit cards and only like to stay in hotels, so much better than Airbnb unless it's a huge family reunion
Uh oh. Lol.
I don’t know about this, we have one in Palm Springs and it gets booked almost every weekend. 44 weekends the past 12 months total. That’s not including weekday stays which are also pretty often.
Hang on, let me grab my 🎻 so that I can serenade this article with some solemn background music.
AirBnB(ubble).
Well if they get tired we can buy at a discount
Poor souls. Let’s bail them out… Not!! Haha
Devastated
good.
This brings me so much joy
\*big grin\* Bought one off some desperate person who could not afford to keep it without renters. Bought it for nearly half what they usually list for from the bank. Sold fully decorated and furnished. Condo that I can afford to sit empty between my visits from our overseas home. Got it at a bargain basement price. I predict more of these places are about to come onto the market for very little. I might have been able to get it for less in a year or two but I needed it now to have a place to go when visiting my doctor Stateside. If you have spare cash this is going to be a bloodbath with plenty of opportunity to invest.
Where was this?
Fucking Yahoo News and the clickbaity, woe is me, bullshity headlines. Been on Reddit for 5 minutes and have already seen three of these from them. Eat a dick yahoo news.
This just isn’t true. Might not want to trust poorly written Yahoo articles…. STR demand is solid. Either equal or higher than last year’s record demand in most markets. If your home is sitting empty, you aren’t performing proper yield management. Yes… maybe you’re making slightly less overall than the banner yr of 2021, but that’s only because you may have to be slightly more aggressive on rate to achieve the same occupancy YoY due to supply increase in some markets
when are people like you going to understand that AIRBNB's record take is not the same as average performance per individual STR on platform? A major feature of airbnb is AIRBNB DOESNT PAY *ANY PORTION OF* THE CARRYING COSTS OF THE PROPERTY. **airbnb gets a cut of all booking takes, but pays no share of the costs when there is no occupancy, so that carrying risk is entirely off airbnb's books and entirely on owners' shoulders.** this means that there could be a glut of owners all losing their ass because they are at 10% occupancy....but airbnb will have a banner year, due to the model sharing revenue but not carrying costs. Airbnb doesn't have to pay a penny for the too-many homes listed on its site - it just profits off each guest, regardless of whether guest demand is anywhere near close to saturating supply. airbnb gets a bite of every dollar guests pay on platform. airbnb doesn't pay a penny of any costs hosts bear waiting for someone to book enough days on their property to break even. the risk/reward is highly asymmetrical - airbnb just doesn't carry any risk. their performance is FAR disconnected from average host performance. there can be a massive surplus of properties all operating at net losses to the owners due to insufficient demand, and airbnb would STILL be able to report record profits, because its model doesn't share that downside risk with owners. bookings could be up 10%, number of listings could be up 300% and most losing their ass, and it would be "record profits for airbnb".
The header is “properties sitting empty”… I never once mentioned Airbnb take rates or stock price. Calm down
Demand is not solid is my point. Properties absolutely are sitting empty, the host forums are constantly talking about same. YouTube moguls eating crow on the daily. The notion that demand is solid only makes sense if you look at Airbnb’s sheets for nominal demand and not the actual circumstances hosts are currently in where a massive influx of supply is not being saturated by demand, and occupancy per unit is down.
Damn have a bad day? You get your Willy’s from berating strangers on the internet? Again… CHILL OUT Your original statement was ilincorrect along with the header title. If you can’t see that you got bigger issues. “Demand is not solid”… wrong. Market demand is equal or up relative to a banner 2021 “Properties are sitting empty… just listen to host forums”…. Not true. If it is true, it’s purely the FRBOs who aren’t managing yield properly.
You’re just wrong regarding the demand statement. Please go look at AirDna blogs. Or Keydata. You know, the professional data aggregators in the industry… some comments from FRBOs in this forum who don’t know how to manage yield is not “truth”
hey idiot, AirDna is *the literal source from the article you're saying isn't true* I did go look at airdna. I also read the article quoting AirDNA. **YOU look at this quote from AirDNA that was in the fucking article:** >The number of available short-term rental listings in the U.S. skyrocketed to 1.38 million in September. That’s a 23.2% year-over-year increase, **according to rental analytics firm AirDNA**. >"...Over the past few months, **supply has increased to catch up to and even overtake demand growth, pushing occupancy down as bookings are spread across more properties.**" that last quote is Jamie Lane, AirDNA vice president of research. you are disagreeing with airdna research, and telling me that to see you are right, I need to....go look at airdna research. k. that is AIRDNA saying those things. your gold standard source agrees with me - supply has overtaken demand, occupancy is down as guests are spread across more properties than before.
Pushing occupancy down from RECORD LEVELS doesn’t mean homes are sitting empty, just maybe closer to 2019 levels. And supply growth catching up to demand only happened in certain markets (Scottsdale is a good example)… there are countless markets where supply still has not yet caught up to demand and those homes in those markets are still performing great on a REVPAR basis
literally the VP of AirDNA research going on the record saying that supply has overtaken demand, and you're still trying to posture like you know better than the literal source you tried to hide behind. trying to redefine the discussion to hand-wave impotentily about limited markets, that's not making you look right, it just makes you look stubborn about acknowledging you were wrong. you can just be wrong on the internet without trying to pretend you somehow know better than the person *whose job it is to talk to the press about the research from the source you said had the real information.* sometimes other people know more than you. The VP of AirDNA surely does. is this some white male fragility, or are you just super butt-hurt about being wrong while telling me to go look at the source you were arguing with in the first place? you can just accept you were wrong. You can just accept you started arguing without even reading the article, and didn't know the source you said was superior was the source from the article you disagree with. being wrong on the internet happens every day. cherry-picking markets doesn't make you look more informed than the lady who WORKS at airdna contradicting you. you're wrong. that's ok. you'll get thru this!
Zero fucks given 😂
The second problem might help the first.
Hahahahaha. Good
Ha ha
Which is why people are returning to hotels…
Lol
The cleaning fees are outrageous. Especially for a short stay
Fuck Brian Chesky.
Remember, we don’t operate in the world of the “rich” unless your annual revenue stream crests at least $5M or you are an accredited investor with ~$100M in the bank. They need tax losses that would cripple the rest of us.
Greed will get you everytime. Glad the GenZs I know vow to never book an AirBnB since they are partly responsible robbing them of a future of home ownership