I previously wrote an article warning investors not to rely on Airbnb projected income numbers when evaluating potential income properties for purchase.
Now, Reventure Consulting reports that numerous owners of Airbnb properties are preparing to sell their properties due to the current downturn in the short-term rental market, which has been referred to as the “Airbnb bust.” This market decline began in the latter half of 2022, resulting in a significant drop in revenue for Airbnb operators in certain cities, with some experiencing a 50% decline. The decrease in revenue is primarily attributed to a decrease in post-pandemic travel demand and a simultaneous increase in the availability of Airbnb listings, leading many operators to face financial losses.
It is expected that these losses will lead to a wave of distressed selling by Airbnb operators in 2023 and 2024, particularly in cities where revenue has seen the most significant decline and the supply of Airbnb listings has increased substantially. Airbnb owners may soon be forced to sell their properties, resulting in a housing crash that could be on par with 2008 in some cities. As the situation unfolds, there may be favorable opportunities for homebuyers and investors.
The prior increase in Airbnb purchases during the pandemic could be attributed to three main factors: investors purchasing properties for short-term rental purposes, investors seeking yield in a declining cap rate environment, and homeowners choosing to list their properties on Airbnb rather than selling them partly because they had loans with low interest rates. This led to a reduction in the available inventory of the housing market in the United States. These were market distortions, partly due to the pandemic, partly due to low interest rates, that will probably soon unwind now that work-from-home is being replaced with a push to bring people back into the office and now that interest rates are high and possibly will increase even more.
The upcoming Airbnb selloff will happen in urban neighborhoods and vacation destinations, where Airbnbs were most popular. The most significant impact of the Airbnb bust is currently being observed in Phoenix, AZ. Counties where Airbnb revenues are declining the most (comparing May 2023 revenues to May 2022 revenues) are the counties that include:
| East Stroudsburg (Monroe), PA | -52.9% |
| Lake Havasu (Mohave), AZ | -50.4% |
| Kalispell (Flathead), MT | -49.2% |
| Austin (Travis), TX | -48.6% |
| Sevierville (Sevier), TN | -48.4% |
| Phoenix (Maricopa), AZ | -48.2% |
| Myrtle Beach (Horry), SC | -49.9% |
| Homosassa Springs (Citrus), FL | -47.9% |
| San Antonio (Bexar), TX | -47.0% |
| Gulfport (Harrison), MS | -45.7% |
| Fort Collins (Larimer), CO | -43.6% |
| Denver (Arapahoe), CO | -43.1% |
| Florence (Pinal), AZ | -42.6% |
| Colorado Springs (El Paso), CO | -42.6% |
| New Braunfels (Comal), TX | -42.1% |
| Jacksonville (Onslow), NC | -41.3% |
| Fresno (Fresno), CA | -40.7% |
| Tacoma (Pierce), WA | -40.6% |
| Port St. Lucie (St. Lucie), FL | -40.5% |
| Medford (Jackson), OR | -40.5% |
| Mobile (Mobile), AL | -40.0% |
| Coeur d’Alene (Kootenai), ID | -39.7% |
| Bend (Deschutes), OR | -39.6% |
| Golden (Jefferson), CO | -39.6% |
| Bakersfield (Kern), CA | -39.2% |
https://www.reventure.app/blog/airbnb-owners-are-being-forced-to-sell