The “Airbnbust” has cooled the short-term rental market as market forces catch up for the popular fad.
Key Details
- On Monday, June 5, Airbnb landed at position 450 on the 2023 Fortune 500 list, reflecting the company’s remarkable growth since 2020.
- However, the overall rental market faces issues, with rental space owners reporting declining revenues and fewer customers.
- Despite short-term rentals reaching record highs last year, companies like Airbnb and Vrbo face a shifting market.
- The rental market is not going away, but a re-adjustment in the market will need to take place that maximizes local tax revenue and does not crowd the market with too many properties.
- AirDNA predicts that nightly rates will increase by 2% this year as rentals decrease but will result in improved quality experiences for customers.
- The reduction in occupancy is still expected to see a 9% growth in the name of listed rental properties.
Why It’s Important
The rise in remote work and the economic growth post-pandemic has seen massive growth for the short-term rental market, with dozens of businesses and towns benefitting from a more mobile population. People who can remotely work are taking advantage of those positions and working remotely in new places and rental homes, enjoying time away from home.
The rental market faces an inevitable and painful correction in the face of a ballooning market bubble. An oversupply in the rental market has ballooned in some markets and negatively impacted rental prices and demand, while other regions have capped the number of permitted properties available. The result is a bifurcated market, Business Insider reports.
Some cities have gone as far as to consider fully banning Airbnb and Vrbo. Local leaders from the Birmingham, Alabama, suburb of Gardendale have begun cracking down on rental services and increased regulations against them. Florence, Italy, is currently attempting to ban property owners from turning their properties into rental properties. Airbnb filed a lawsuit against New York City on June 1, fighting an upcoming ordinance that limits the number of available rental properties in what it calls a “de facto ban.”
“In some places, it’s still the Wild West. In other places, they’ve put limitations, restrictions, and that, in turn, means that the legitimate operators tend to have a little less competition. It’s certainly a mixed bag, and I’ve got clients on both ends of the spectrum,” says Deckard Technologies CEO Nick Del Pego, who tells Business Insider that Airbnb “isn’t going anywhere. The business is just maturing.”
