By J. Graber | Daily Independent
The high inflation and whispers of a coming recession that are part of life in 2023 has not translated into the “Airbnbust” for the short-term rental market that some are worried about here in the Valley.
Dynamics have shifted with the economic uncertainty but short-term rental demand is strong across the county, according to a report issued by AirDNA, a website that specializes in researching the short-term rental market.
“We expected that consumers would prioritize travel despite the economic climate, and a closer examination of recent demand and pacing trends has given us confidence that this is exactly the case,” the report stated.
“Instead of canceling plans, travelers have been hunting for value, and the (short-term rental) market has been able to provide this through an unparalleled mix of offerings.”
A viral tweet by Nick Gerli, CEO of Reventure, a website dedicated to researching the housing market, predicts a huge collapse of the short-term rental market in the second half of 2023 accompanied by a massive sell off.
The tweet claims revenue for short-term rentals in the Valley was down 47.2% in May of this year from May 2022.
“Ground zero for this Airbnb collapse is a city like Phoenix, where the number of short-term rentals (18k) is more than double the number of for sale listings (8k). Mix the huge Airbnb supply with revenues down — 50% and you get a cocktail for massive forced selling,” Gerli posted.
Gerli did not respond to a request for an interview, but cites a website called “All the Rooms” as the source of his information.
All the Rooms did not respond to a request for an interview either, but Gerli’s tweet got enough traction that AirDNA did their own research into the claim that revenue has dropped so steeply.
The AirDNA report claimed revenue only fell 3% in the Valley in May 2023 from May 2022.
“It’s possible that there is something wrong or misleading in the analysis of the data by Nick Gerli since it is not replicable from our dataset,” AirDNA spokeswoman Chloé Garlaschi wrote in an email to the Daily Independent.
A saturated market
The increased competition for bookings as well as rising costs in time and money to meet local licensing requirements are driving people out of the short-term rental market, said Suzanne Brown, director of community and government affairs for the Scottsdale Area Association of Realtors.
It’s important to note that short-term rentals being converted to long-term rentals doesn’t necessarily mean they are renting for a year or more.
A short-term rental, by definition rents for less than 30 days and anything over that is considered a long-term rental. That means many are being rented out to people like traveling professionals, such as traveling nurses or construction workers, who are only renting places for two months or so, however long it takes to get their job done.
Also, many short-term rentals are people’s second home, so the owners are also choosing to just take them off the market and keep them for their own use, Brown said.
But those choosing to sell aren’t going to solve the affordable housing shortfall in the Valley, Brown said.
Most short-term rentals are high-end properties that carry a hefty price tag in the real estate market, she said.
“To be considered affordable (low income) housing in Scottsdale, property value would have to be less than approximately $200,000. To be considered attainable (middle income) housing, property values range from approximately $200,000 to $400,000,” Brown wrote in an email to the Daily Independent.
“Speaking with several of our short-term rental property managers, their properties range from high-end to luxury with market values upwards of $500,000 and up.”
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