Market Volatility: The New Normal
Before heading full steam into the new year, our team at AirDNA is taking a moment to reflect on the performance of the entire US vacation rental market in 2019. With year-end data for over 1 million listings now in the books, this presents an opportunity to highlight the most dominant themes over the last 12 months as we prepare for 2020.
Put simply, 2019 was a roller coaster for many hosts and property managers around the country. While some places experienced either consistent growth or consistent declines, the national theme was one of volatility. Month-to-month variability was all but commonplace, and only once in the 12-month period did we see months with back-to-back growth. Contractions were short-lived, but so too were moments of increased profits.
All in all, the United States vacation rental market saw a 14.3-point slide in 2019 compared to a 2.48-point rise over the same period in 2018. Data from January — one of the industry’s strongest months — will be a telling sign of whether markets are still poised to bounce back.
Here’s how AirDNA STR Index wrapped up the decade:
Urban vs. Destination Markets
One particularly eye-catching storyline from 2019 is how urban markets officially overtook destination markets. We hinted at this in September’s STR Index, and this past month it officially flipped: urban markets are now generating more revenue than their destination counterparts. Urban markets saw a two-point boost to 131.4 while destination markets dropped nearly three points to 129.5.
This hasn’t been the case for nearly two years since early April of 2018. Time will tell if this signals a reversion to the US market’s pre-2018 ways.
Urban Short-Term Rental Markets: Up 2.1 Points in December
Increasing
- Chicago, IL: The unrivaled Midwest vacation rental capital is showing no signs of letting up. With a B+ grade on MarketMinder, Chicago’s 8,600+ short-term rental hosts have plenty of room to grow.
- Detroit, MI: Detroit continues to prove to many around the country that it should no longer be considered a dark horse in the vacation rental conversation. Up nearly 17% from the same month last year, it’s time to genuinely give credit to Motor City.
- Los Angeles, CA: Wintertime continues to fare well for Southern California. Short-term rental hosts in Los Angeles benefit from a nearly perfect score for seasonality (97/100) as travel demand keeps up year-round.
Decreasing
- Columbus, OH: In back-to-back months, Columbus has found itself among the worst-performing cities in the US. Down 14% in November and 22% in December, it’s going to take a significant sea change to make the Ohio capital a profitable spot for property managers.
- Texas: The state of Texas seems to be a microcosm of overall US trends. Whereas a handful of cities last month saw record year-on-year profits, this month was the opposite: the entire Dallas/Fort Worth area reported negative returns.
| City | December '19 Revenue | Y/Y% | Active Rentals |
|---|---|---|---|
| Chicago, IL | $2,816 | 20% | 8,715 |
| Detroit, MI | $2,542 | 17% | 945 |
| Los Angeles, CA | $3,973 | 17% | 16,898 |
| Portland, OR | $2,306 | 15% | 5,624 |
| San Jose, CA | $3,315 | 14% | 2,955 |
| Atlanta, GA | $2,821 | 13% | 11,296 |
| Austin, TX | $3,821 | 10% | 9,324 |
| Jacksonville, FL | $2,149 | 8% | 1,221 |
| Denver, CO | $3,043 | 8% | 5,686 |
| Indianapolis, IN | $2,513 | 7% | 2,372 |
| Phoenix, AZ | $3,126 | 7% | 4,408 |
| Philadelphia, PA | $2,549 | 7% | 6,266 |
| Houston, TX | $2,165 | 6% | 8,661 |
| San Francisco, CA | $4,716 | 5% | 7,379 |
| New York, NY | $4,415 | 5% | 39,536 |
| Charlotte, NC | $2,539 | 4% | 2,863 |
| San Antonio, TX | $2,709 | 4% | 3,919 |
| Boston, MA | $2,849 | 3% | 2,565 |
| San Diego, CA | $3,982 | 1% | 11,462 |
| Nashville, TN | $3,642 | 1% | 7,953 |
| Washington, DC | $2,757 | -1% | 7,105 |
| Seattle, WA | $2,631 | -1% | 8,456 |
| Dallas, TX | $2,616 | -2% | 4,320 |
| Fort Worth, TX | $2,439 | -12% | 1,308 |
| Columbus, OH | $2,193 | -23% | 1,471 |
Traditional VR Destinations Down 2.5 Points in December
Increasing
- Hawaii: The country’s most traditional short-term rental destination continues to impress in back-to-back reports. Both November and December saw Lahaina, Kihei, and Honolulu among the nation’s fastest-growing spots.
- Las Vegas, NV: Unlike last month’s report, however, this city of sin ended the year as a clear standout with over 18% year-on-year growth.
Decreasing
- Florida: Once again, a sizeable handful of cities in Florida occupy the bottom section of the STR Index. Panama City Beach, Davenport, Kissimmee, Destin, Santa Rosa Beach, and Miramar Beach all have reported ongoing downturns.
- South Carolina: Myrtle Beach, North Myrtle Beach, and Hilton Head Island are South Carolina markets that usually make headlines as success stories. As 2019 wrapped up, the opposite was true as all reported significant downturns.
| City | December 2019 Revenue | Y/Y% | Active Rentals |
|---|---|---|---|
| Lahaina, HI | $8,445 | 26% | 5,794 |
| Saint Petersburg, FL | $3,114 | 20% | 6,068 |
| Las Vegas, NV | $4,075 | 18% | 10,215 |
| Orange Beach, AL | $2,245 | 13% | 5,900 |
| Kihei, HI | $6,818 | 10% | 6,131 |
| Sarasota, FL | $3,604 | 9% | 5,640 |
| Fort Lauderdale, FL | $4,828 | 8% | 5,352 |
| Honolulu, HI | $4,920 | 8% | 7,253 |
| New Orleans, LA | $3,557 | 7% | 8,491 |
| Park City, UT | $8,556 | 5% | 6,095 |
| Miami Beach, FL | $5,270 | 3% | 6,857 |
| Orlando, FL | $3,771 | 3% | 8,272 |
| Gulf Shores, AL | $2,117 | 3% | 6,237 |
| Miami, FL | $4,217 | 0% | 12,116 |
| Breckenridge, CO | $8,847 | -2% | 5,195 |
| North Myrtle Beach, SC | $2,190 | -6% | 3,843 |
| Miramar Beach, FL | $2,300 | -7% | 4,634 |
| Sevierville, TN | $5,032 | -7% | 5,563 |
| Hilton Head Island, SC | $3,028 | -7% | 6,724 |
| Santa Rosa Beach, FL | $3,481 | -8% | 4,588 |
| Myrtle Beach, SC | $1,615 | -9% | 6,606 |
| Destin, FL | $2,528 | -12% | 4,910 |
| Kissimmee, FL | $4,853 | -16% | 53,512 |
| Davenport, FL | $4,213 | -18% | 21,550 |
| Panama City Beach, FL | $1,869 | -29% | 8,964 |
Short-Term Rental Report Methodology
The AirDNA Index is calculated using the seasonally adjusted mean revenue of all properties the in the market. Currently there are almost 2 million active rentals across the U.S. on Airbnb and Vrbo.
Seasonality is removed by using a revenue coefficient for each market’s monthly average rental revenue over the past five years. This allows us to remove the seasonality swings in each market and report a monthly trend.
After in-depth analysis of several different methodologies that included only analyzing the same basket of properties year over year, or adjusting for property size, to name a few, AirDNA found that the mean of all short-term rental performance provided the most simple and equally accurate indication of the markets’ movement.
The Index is based on all data available in the month prior to publication.