AirDNA Names Galveston a Top 5 Market Next 5 yrs

[Quinn Olivarez]

Galveston is among several other TX markets on AirDNA's ranking of best vacation rental markets in the next five years. Fredericksburg tops the list, followed by Corpus Christi, Galveston and South Padre. Broken Bow Lake OK rounds out the top 5. Their analysis is based on the growth of the larger metros throughout the United States that drive regional tourism into various vacation rental markets. This bodes well for all current STR operators in the region, as well as hopeful investors moving forward.

What do y'all think of the methodology AirDNA uses? Have you considered investing in any of the Texas markets, or are high insurance and property tax costs a non-starter for you?

[John Underwood]

I personally only buy vacation rentals in areas I want to take the family on vacation.

This is not TX for me. I'm sure others may love that area.

[Collin Hays]

Quote from @Quinn Olivarez:

Galveston is among several other TX markets on AirDNA's ranking of best vacation rental markets in the next five years. Fredericksburg tops the list, followed by Corpus Christi, Galveston and South Padre. Broken Bow Lake OK rounds out the top 5. Their analysis is based on the growth of the larger metros throughout the United States that drive regional tourism into various vacation rental markets. This bodes well for all current STR operators in the region, as well as hopeful investors moving forward.

What do y'all think of the methodology AirDNA uses? Have you considered investing in any of the Texas markets, or are high insurance and property tax costs a non-starter for you?

 Can't speak for AirDNA, but you don't have to have sophisticated software to know that Galveston is a great spot for a vacation rental. But property taxes in Texas are high, as there is no state income tax.  

[Garrett Brown]

Native Houstonian here. I was pleasantly surprised to see so many close locations to Houston listed. It was interesting to see they scraped review data and saw where travelers mentioned driving from the most to build this list along with metro city growth. 

Galveston is a great market if you have a good deal, but insurance and taxes make it very tough to pencil out a lot there. I can see potential in all of those markets but I could imagine Corpus Christi may be the easiest market to find a deal in out of those. I have a lot of belief in the Lake Conroe, Bastrop, and Temple markets in the future to grow in the areas as well. 

[Kumar R.]

@Quinn Olivarez Huge qualifier "based on feeder city growth". None of the cities listed are destination tourism cities. Just a whole lot of data slicing and dicing to bring up cities that otherwise will not top any unqualified lists. I would watch out for these kinds of marketing efforts. 

[Andrew Steffens]

I can't speak for TX but I have seen areas near my base in Tampa (example Crystal River) go on the list, and then disappear. Crystal River is famed for swimming with Manatees but I do not think it attracts a lot of people from around the world, more or less of a day trip. Property value was low there so the few STR's likely did do well. But then off the list, I imagine the property values went up and/or the new competition drove the ADR's down. Either way, I take these lists with a grain of salt.

[Robin Simon]

Quote from @Quinn Olivarez:

Galveston is among several other TX markets on AirDNA's ranking of best vacation rental markets in the next five years. Fredericksburg tops the list, followed by Corpus Christi, Galveston and South Padre. Broken Bow Lake OK rounds out the top 5. Their analysis is based on the growth of the larger metros throughout the United States that drive regional tourism into various vacation rental markets. This bodes well for all current STR operators in the region, as well as hopeful investors moving forward.

What do y'all think of the methodology AirDNA uses? Have you considered investing in any of the Texas markets, or are high insurance and property tax costs a non-starter for you?

I think a big value for Galveston (despite its warts) is that it is an ideal STR market for a recession/downturn (that hasn't quite seem to come yet despite lots of people predicting it, but it might be finally here). Perfect STR market for people "cutting back" from Carribean/Mexican/US Coastal vacation trips to drivable, more affordable trips from Houston/Austin/San Antonio (even DFW). Thats the overwhelming bull case for Galveston IMO

[Garrett Brown]

Quote from @Kumar R.:

@Quinn Olivarez Huge qualifier "based on feeder city growth". None of the cities listed are destination tourism cities. Just a whole lot of data slicing and dicing to bring up cities that otherwise will not top any unqualified lists. I would watch out for these kinds of marketing efforts. 

I think your being in Florida may not give you the full picture here. Fredricksburg and Galveston are big draws in Texas and the Southeast alike. It may not be the Smokys, but these get repeated guests every year, and most people only go to the "destination" tourist cities once in their lives. I have never been to many of the big national destinations, but I have been to these cities an insane amount compared. Their feeder city information shows the massive amount of growth in these cities and that people will look for nearby travel areas for all activities. 

[Kumar R.]

@Garrett Brown Curious, would you rank Fredricksburg as a bigger tourism market than - NYC, LA, Orlando, Miami, Aspen, Smokies, Lake Tahoe, Yellowstone?? 

:-) I am not hating on Houston, by all means I am fully supportive of tourism and STRs selfishly. But to think that Texas has 4 out of 5 top STR markets I think is farfetched. I still think markets in Texas are gonna be strong markets without a doubt.

[Garrett Brown]

@Kumar R. No hate taken at all lol. I agree that 4 was a stretch to put in there, but that isn't the article's point. These cities are growing more than any feeder cities by the places you mentioned. This brings tourism even higher in these areas based on sheer population proximity. People use STRs for small vacations/ parties/ random travel just as much as massively planned vacations. 
Those are all big tourism markets for sure, but how many families will go to Orlando every year? 

[V.G Jason]

All those 5 spots are pretty much the only 5 spots. Not really breaking news here.

[Quinn Olivarez]

Quote from @Kumar R.:

@Garrett Brown Curious, would you rank Fredricksburg as a bigger tourism market than - NYC, LA, Orlando, Miami, Aspen, Smokies, Lake Tahoe, Yellowstone?? 

:-) I am not hating on Houston, by all means I am fully supportive of tourism and STRs selfishly. But to think that Texas has 4 out of 5 top STR markets I think is farfetched. I still think markets in Texas are gonna be strong markets without a doubt.

The subject isn't whether Texas has the best STR markets in perpetuity, the subject is a five year demand window based on migration trends. That period of time may be more or less relevant individual investors, but it is the obvious starting point for the discussion. Would I rather own an AirBNB in Galveston for the next five years where a permit currently costs $250 a year and a correctly bought deal can still perform exceptionally, or in NYC where I can no longer operate now and for the foreseeable future? Your sarcastic answer isn't as cut and dry as you think...

[Travis Timmons]

I lived in Houston for about a dozen years. Galveston sucks. Charles Barkley was right. It's not a great beach destination. HOWEVER, in those dozen years I lived in Houston, the metro area added 1.3M people. That's essentially adding the population of SLC metro or Memphis metro in a short amount of time. You can't argue with Galveston as a growing market based on the insane population growth in Texas. 

@Kumar R. of course you would never get on a plane and fly to Galveston for a vacation; that's not the point that is being argued. Texas has a population of about 30M with a serious up and to the right trend. When TX has a greater population than all of Canada in a few years, those vacation markets are going to thrive from an investment standpoint. It'll still be mediocre wine in Fredericksburg and brown ocean water in Galveston, but there's a massive increase in the pool of people that can hop in the car and go for a weekend. 

[Mark F.]

Quote from @Travis Timmons:

I lived in Houston for about a dozen years. Galveston sucks. Charles Barkley was right. It's not a great beach destination. HOWEVER, in those dozen years I lived in Houston, the metro area added 1.3M people. That's essentially adding the population of SLC metro or Memphis metro in a short amount of time. You can't argue with Galveston as a growing market based on the insane population growth in Texas. 

@Kumar R. of course you would never get on a plane and fly to Galveston for a vacation; that's not the point that is being argued. Texas has a population of about 30M with a serious up and to the right trend. When TX has a greater population than all of Canada in a few years, those vacation markets are going to thrive from an investment standpoint. It'll still be mediocre wine in Fredericksburg and brown ocean water in Galveston, but there's a massive increase in the pool of people that can hop in the car and go for a weekend. 

I was coming to say this. Lived in Galveston for a couple years, hated it. Gross beaches and just plain sucked. Cruise terminal may help with overnights but downtown sucked. Couldn't pay me to have an STR there though. Doubt you'd get any repeat guests once they realize the water is brown from Rig City.

[Michael Baum]

Hey @Quinn Olivarez, I am with @Andrew Steffens on this. These lists come up all the time with long term top of the market, etc etc and it changes every 6 months.