Is the Airbnbust really here? We debunk the doomsayers through a meticulous analysis of the stability in home values, low mortgage delinquency rates, and resilient short-term rental market dynamics, showing that the real situation is a far cry from the apocalyptic scenario we’re seeing on social media.

Housing Doomers and the Myth of Airbnbust | AirDNA

You’ve seen the social media posts. “Airbnbust is finally here.” “Short-term rentals are causing a housing market crash.” It’s a frightening narrative, but is it accurate? We’re here to set the record straight on what’s happening with short-term rentals (STR) and why housing doomers may have missed the mark. Using data from AirDNA, Zillow, Redfin, and the Federal Reserve Board, we explain why trends in home prices, mortgage delinquency, RevPAR, and rental churn should dispel any concerns about Airbnb’s impacts on the U.S. real estate market. 

As part of our ongoing commitment to accuracy, we continuously implement data methodology improvements, leading to updates to some of the information in this report as of December 7, 2023. For further questions, please contact us.

What is Airbnbust — and should homeowners be concerned? 

The Airbnbust narrative goes something like this: a surplus of Airbnb hosts enters the rental market, leading to a smaller piece of the pie for existing hosts and lower potential earnings. Falling revenues translate into missed mortgage payments, triggering mass property sales and plummeting home prices across the U.S.  

So-called “housing doomers” argue that this nightmarish scenario is unfolding before our very eyes. They say that rental bookings have dropped off and listings are sitting empty for the first time in years. That said, there are several trends in the housing and STR markets working against the theory of Airbnbust. Home values remain high, active listings are down, and mortgage delinquency is low. In the STR market, churn—listings that leave Airbnb as a percent of total listings—has followed a downward trajectory since 2018, meaning that a smaller chunk of supply is leaving the platform. Furthermore, revenue per available rental (RevPAR) has plateaued after peaking in 2022 and remains well above pre-pandemic RevPAR. Here, we analyze these trends and provide evidence against the negative scenario described above.

Home Values Have Returned to Historic Highs

Data from the U.S. Zillow Home Values Index (January 2000 – October 2023) show that home values grew steadily from 2012 until the COVID-19 pandemic of 2020. Subsequently, home values began to grow at an even faster pace, reaching $343,000 in August 2022. This was followed by a brief dip, with values falling to $337,000 by March 2023. However, thanks to steady demand and the low supply of active listings, home values have since recovered, reaching $347,00 in October 2023.  

On the supply side, high mortgage rates mean that homeowners are only selling when faced with unexpected events, such as divorce, family emergencies, or return-to-office policies. Many homeowners who locked in record-low interest rates in 2020 and 2021 are reluctant to reenter the housing market. The fall in active home listings for sale suggests that homeowners, including those who rent short-term, are not abandoning their properties or contributing to a rapid increase in housing supply. 

With low supply, housing market performance will depend heavily on the availability of new listings. However, the U.S. has struggled to keep pace with accelerating demand amid increasing population growth. The construction of new homes has also been negatively impacted by pandemic-related labor shortages, building material costs, and supply chain constraints. Further, existing homeowners have few incentives to sell their homes in the current market. New listings were up 5.8% YOY in November, but behind 2020 and 2021 levels. Moving forward, forced sellers will be the primary driver of new listings. 

Elevated mortgage costs, combined with higher home values and low inventory, have made home ownership increasingly unaffordable. Between July 2021 and July 2023, average monthly mortgage payments increased from $1,002/month to $1,875/month. This means that the cost of a new mortgage reached a 20-year high. While this creates barriers for homebuyers, it also suggests that there are important factors outside the STR market shaping housing affordability.   

Despite elevated mortgage costs, delinquent mortgages—failure to make mortgage payments—remain low. Delinquency fell from 1.96% in the second quarter of 2022 to 1.72% in Q2 2023, a -12.2% year-over-year change. Rates have also fallen from Q2 2018 and Q2 2019, when they were 3.2% and 2.6%, respectively. These trends indicate that the overall health of the U.S. mortgage market remains robust and can be explained in part by the fact that housing debt service payments as a percent of disposable personal income are at an all-time low. Most homeowners, including STR hosts, are still making their monthly mortgage payments; they have not been forced to abandon their rental properties as housing doomers suggest. 

Housing market data tells part of the story on why the STR market is unlikely to trigger a housing market crash, but an analysis of churn—listings that leave Airbnb as a percent of total listings—provides additional context. During the height of the COVID-19 pandemic in 2020, churn exceeded new Airbnb listings as travel restrictions came into place, and many listings turned to long-term rentals or became primary residences. The number of new listings fell by more than 50% over two months, while churn began to rise. This constituted a major loss in new listings for Airbnb, but by the end of 2020, new listings had rebounded, and churn had started to fall. 

Beginning in early 2022, we began to see a significant uptick in new listings while churn stayed relatively low.  This allowed for an increase in net listing change—the difference between new and churned listings. Throughout 2023, net listing change reverted back to more typical levels and remains positive, as more listings come online than go offline.

Looking at churn over time, we see that the share of properties leaving Airbnb has followed a downward trajectory and that churn remains historically low. Churn peaked at 4.8% during the pandemic, and despite a small uptick in early 2023, it now sits at 2.8% as of September 2023, equaling the September rate of churn in 2022 and 2021. Broadly speaking, the share of properties exiting the STR market each month has continued to fall since 2018.  

The story of churn differs by location type and city, with urban and suburban areas typically attaining the highest levels of churn. In 2021, churn reached3.7% in urban areas, 3.3% in suburban areas, and only 2.1% in small city/rural areas. In 2023, churn reached 4% in urban areas, 3.4% in suburban areas, and 2.1% in small city/rural areas. This pattern reflects what happened to demand during the pandemic. Large cities naturally saw a larger spike in churn as demand dropped off more dramatically in these areas. In contrast, rural areas became more popular for guests looking for the great outdoors, and there was less incentive for listings to leave. This pattern dates back to 2018, but churn in all location types is lower in 2023 than before the pandemic, indicating that a smaller share of hosts is leaving the STR market than in the past. 

There was a modest uptick in churn forsome mountain/lake and coastal markets between the autumns of 2022 and 2023, but not all U.S. cities in these markets experienced an increase. For example, churn increased in Long Island, New York, Big Bear, CA, and Maui, HI but fell in San Diego, CA and Miami, FL. Churn in other cities, such as Gatlinburg, TN and Coachella Valley, CA, remained changed between this year and last. 

Overall, it appears as though the housing and STR markets are performing in a way that runs counter to the Airbnbust theory, but could explosive listing growth exacerbate the outlook?  This seems unlikely, as listing growth has already cooled since spiking in 2022. Over the past year, the U.S. has since achieved a moderate, stable pace of growth, climbing modestly from approximately 1.4 million listings in August 2022 to almost 1.6 million in October 2023. 

Finally, we assess RevPAR for listings that were single-family homes, listing the entire place. Looking at the trailing 12 months (TTM), RevPAR peaked at $205.95 in May 2022 before falling slightly to $201.07 in December. Since then, RevPAR has been within $2 of where it was in December, dropping slightly to $199.20 in October 2023. This remains well above 2019 levels. Elevated RevPAR indicates that hosts have not experienced a precipitous loss in earnings.

Evidence from the U.S. housing and STR market is clear: the narrative around Airbnbust is largely unfounded. Elevated home values, limited housing supply, and low mortgage delinquency rates debunk the notion that hosts have abandoned their properties and weakened home values. In June, nearly 95% of single-family homes were able to make their monthly mortgage payments, and home values had returned to all-time highs. Churn in the STR market has followed a downward trajectory since 2018, and the share of total rental properties that have left the market remains historically low. Furthermore, RevPAR increased through late 2020 and 2021 and plateaued after peaking in 2022. High and stable RevPAR, combined with low mortgage delinquency and churn, tells us that rental hosts are here to stay. An Airbnb-induced housing market crash appears highly unlikely. 

Find out what's really going on with short-term rentals in your area with AirDNA

Housing Doomers and the Myth of Airbnbust | AirDNA

ARTICLE SUMMARY

QUICK NAVIGATION