Short Term Rental market, Hot, cold or lukewarm?

Short-Term & Vacation Rental Discussions

Short Term Rental market, Hot, cold or lukewarm?

Real Estate Agent · salt lake city · Member since 2019 · 43 posts · 31 votes

I've heard the Short Term Market cooled off quite a bit over the last year or so, wanted to see what you all are seeing in your markets.

801-808-7695

1 Reply

106 views

Most Popular Reply

Julien J.

Investor · CO · Member since 2016 · 757 posts · 1k+ votes

@Vince Craig

Most of my clients looking to acquire STRs are re-evaluating their strategy or underwriting properties to support LTR or MTR strategies as a back. That changed over the last few years where a back up strategy was an afterthought or non excitant.

Headwinds: regulatory, interest rates, house prices, "professional" competition, and market saturation.

6 Reply

See this reply in the discussion

25 Replies

Jump to latestLatest

Sort by

Culin Tate
Rental Property Investor · Maryland / Virginia / Caribbean · Member since 2018 · 53 posts · 43 votes
2y
My portfolio revenue is down 15-20% in 2023 as compared to the peak in 2022.
In speaking with my Airbnb Market Manager he commented that is the case for most.
Its still a great business for professionals treating it like a business.
1 Reply
Christian EhlersBusiness Member
Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
2y
Agreed with Culin, I believe we are down about 8-12% with our rental though it has started to rebound a slight bit lately. Still a great strategy but just be sure if you are going to buy an airbnb you do your revenue projections based on 2023 numbers, and not peak 2021 or 2022 revenue numbers.
[email protected]978-396-9939
2 Reply
Vince CraigPro Member
OP
Real Estate Agent · salt lake city · Member since 2019 · 43 posts · 31 votes
2y
Yeah, that's what I'm seeing too, thanks for the feedback!
801-808-7695
0 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
2y
Pretty cold down here in Orlando/Four Corners area - well, not the temperature, but certainly the booking rates! We were down quite a bit this year compared to last.
Podcast Guest on Show #243
Skyline Properties
View Page
0 Reply
Nathan M kiefer
Rental Property Investor · south carolina and michigan · Member since 2023 · 348 posts · 226 votes
2y
We own 2 in Myrtle SC, down around 12-15% from 2022.
0 Reply
Matt Mertz
Leander TX · Member since 2020 · 179 posts · 150 votes
2y
I think you need to consider 2 primary factors: cost of the property (higher interest rates) and more competition (lots of people jumped in but it depends on your market).
Those two together basically mean less revenue for you.
I've seen some people talk about breaking even and being happy about it because they're counting on house appreciation and enjoy having a vacation home. Personally I think this industry is too much of a hassle to settle for breaking even. I'd look at LTRs in that case (if that's even possible anymore).
Having said that, we're very happy with our cabin but it was a custom build when construction costs weren't crazy. We couldn't build the same thing today.
2 Reply
Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
2y
I would say lukewarm in Tampa. We are down off of peaks 2021/22 about 10-15% but still a good investment in my opinion.
Gone are the days you could throw used furniture in an outdated house and make money. Best practices must be followed. If you get a well located property in the Tampa market, with modern finishes and well designed/furnished with appropriate amenities, you can still cashflow even with optional management and the high rates.
I do firmly believe when rates go down in 2024 demand will spike and so will values, so I think buying now is still a good idea.
[email protected]813-563-0877
Vacation Rentals of Florida53 Reviews
Website View Page
1 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
2y
Hey @Vince Craig, we are pretty static from year to year. We are up about 8% for 2023 right now from 2022.
1 Reply
Mark H. Porter
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
2y
I’m happy to be flat against last year. 2022 was a fluke - Covid money created new vacationers. These were folks who had never taken traveling vacations before and probably never will again.
My projections are against 2019, the year before Covid. 2020 we got hammered, 2021 people came back but mainly to single-family residences where they didn’t have to share facilities, 2022 was crazy travel-wise.
0 Reply
Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
All depends on location, what the STR looks like, the amenities offered, and the management of the property. So, expect a variety of answers on this question.
[email protected]330-557-3021
4 Reply
Joseph Stern
Investor · Tampa, FL · Member since 2020 · 287 posts · 152 votes
2y
@Vince Craig hey Vince, my units are just in demand as ever, I just purchased another property and put it on airbnb and it’s been doing great so far as well. All my units are in Tampa, with a well run product in a good location there seems to be no cool off at all.
2 Reply
Michael Haynes
Investor · Tampa, FL · Member since 2016 · 679 posts · 288 votes
2y
Hello Vince Craig in Utah. I have not seen anybody point out the Fact that if you buy a SFH to be an LTR or STR you really have to be able to make Positive Monthly Cash as a SFH/LTR. You will not be able to keep it if the STR does not work. Right? That gets us back the 1% Rule and if you can't make this minimum work as your Plan B when the STR don't work, then you did not do your Due Diligence. You can't count on Appreciation to save your shorts. Nobody mentions that Appreciation is based on the Business and Real Estate Cycles that no one pays attention to. Are we at the High or Low of the RE Market? Is it time to Buy or Sell? If RE values really are going Down, when do you get out? Utah like lots of States is desperate for new housing, but, who can afford them based on the Wages Earned in that area? Goldcrest Homes in Salt Lake City is selling a new home project with no Mortgage payments for Six Months! That's like the "Zombie Loans" where if you "put a mirror up to his nose and it fogs up" give him a Mortgage! You can't count on the Fed to Lower Interest Rates for Ten Years because that starts the, "Helicopter" Stimulus Money Cycle all over again. Your a Real Estate Agent for goodness sakes.
1 Reply
Brooklyn McCarty
Investor · Member since 2022 · 1k+ posts · 754 votes
2y
This is going to be vary from each market and also from each management style! No two managers are created equal.

If you have your mind made up the STR world is over saturated and you're not going to make any money at it - then that's probably true.

If you have your mind made up you are going to be the best in your market, provide 5 star stays every time and make this thing work - then that's totally true.
3 Reply
Brian Barch
Member since 2022 · 272 posts · 253 votes
2y
Southern Appalachians - strong demand still, Dec is 86% occupancy
2 Reply
Rachel KokosenskiPro Member
Realtor · West Michigan · Member since 2017 · 105 posts · 53 votes
2y
The other key factor is that when STRs were in high demand, a lot of people jumped in thinking they were going to just list it online and the money would roll in. It's a business, not a get-rich-quick option! You still have to treat it as a business and do everything you can to market it effectively.
I also agree with @michaelhaynes - I ALWAYS encourage my STR investor clients to be sure they can pivot their strategy to make the property a MTR or LTR in case the market changes - either by new regulations or lack of demand, etc. You always want an exit strategy. Again, if you treat this as a business, this makes a lot more sense!
2 Reply
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
2y
The STR market is just like the stock market. It's always a good time to invest when you find a good deal, and always a poor time to invest when you find a bad deal. Macro trends don't really mean much. That talk is really for TV programs so they can sell advertising and stay on the air.
The best investment I ever made on a vacation rental was in a period in 2021 where prices were at their peak.
[email protected]806-672-7102
SMOKY MOUNTAIN FALLS INC.51 Review
Website View Page
2 Reply
Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
2y
Western NC has been strong all year but I'm slowing after New Year, which is what I expected for Jan-March.
[email protected]
1 Reply
Theresa Holl
Investor · Minneapolis · Member since 2023 · 265 posts · 162 votes
2y
According to this episode of STR Secrets, major cities are growing. This was a super insightful interview with a higher up from Airdna. Total data nerd. :) The episode was called "STR State of the Industry with AirDNA Chief Economist Jamie Lane"
One of my favorite podcasts.

1 Reply
AJ WongBusiness Member
Real Estate Broker · Oregon & California Coast · Member since 2022 · 822 posts · 696 votes
2y
Quote from @Vince Craig:

I've heard the Short Term Market cooled off quite a bit over the last year or so, wanted to see what you all are seeing in your markets.

Definitely Not, been Hot on the Oregon Coast. The AirBnB apocalypse never materialized. Client constantly generating 10%+ of property valuation in gross annual income. Managing is the biggest challenge here..and I suppose anywhere for that matter.
541-800-0455
Sesemi | STR Brokers powered by Fathom Realty 516 Reviews
Website View Page
1 Reply
Brian Kragerud
Investor · Member since 2021 · 29 posts · 19 votes
2y
@AJ Wong,10% CoC on 10%+ gross revenue of property value (purchase price) we need 5% rates again. Probably why I have trouble sizing up a deal that works today, and I set my ROT is worth more than 10%.
2 Reply
Henry T.
Member since 2022 · 1k+ posts · 1k+ votes
2y
Seattle dead. I've noticed my surrounding competition has cut their prices.
1 Reply
Julien J.
Investor · CO · Member since 2016 · 757 posts · 1k+ votes
2y
@Vince Craig
Most of my clients looking to acquire STRs are re-evaluating their strategy or underwriting properties to support LTR or MTR strategies as a back. That changed over the last few years where a back up strategy was an afterthought or non excitant.
Headwinds: regulatory, interest rates, house prices, "professional" competition, and market saturation.
6 Reply
AJ WongBusiness Member
Real Estate Broker · Oregon & California Coast · Member since 2022 · 822 posts · 696 votes
2y
Quote from @Brian Kragerud:

@AJ Wong,10% CoC on 10%+ gross revenue of property value (purchase price) we need 5% rates again. Probably why I have trouble sizing up a deal that works today, and I set my ROT is worth more than 10%.

Definitely a challenge. There are a few coastal properties that pencil. A cluster Triplex zoned commercial at $575k and a few luxury oceanview rentals.
541-800-0455
Sesemi | STR Brokers powered by Fathom Realty 516 Reviews
Website View Page
1 Reply
John McDonald
Member since 2023 · 158 posts · 96 votes
2y
The short-term rental market has indeed seen some shifts over the past year. While there was significant growth in this sector in 2021 and 2022, partly driven by the increase in remote work and leisure travel, the market dynamics are now changing.

In 2023, the short-term rental market was strong, with the revenue in the vacation rental market around $19 billion. However, the market is experiencing some cooling off. Occupancy rates for the entire year of 2023 are projected to be down by 3% compared to 2022, reflecting a marginal contraction from the previously observed growth trajectory. This change can be attributed to several factors, including high interest rates impacting the affordability of purchasing new rental properties and increased competition from hotels adjusting their pricing and services to better compete with short-term rentals.

Despite these challenges, nightly rates have continued to increase, albeit at a slower pace than during the pandemic. The demand in most markets is still increasing, but it requires more research to find which markets align with your budget and goals. It's also worth noting that some historically hot markets are slowing down due to significant population shifts and increased regulatory restrictions.

The key takeaway is that while the short-term rental market is still robust, it's undergoing changes that require more strategic planning and market research from investors. Adapting to the evolving landscape, such as adjusting pricing strategies, enhancing guest experience, and staying updated on local regulations, will be crucial for success in this sector.

For more detailed information and insights, you can refer to Shared Economy Tax, Safely, DoorLoop, and AirDNA.
1 Reply
Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
2y
Seattle & the Cascade Mountains are down about 20%. Definitely lukewarm to cold.
[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
Website View Page
3 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.