Home Sales and Short Term Rentals are crashing in Phoenix area. Spells disaster for PIF.

BY Nick Gerli:

The Airbnb collapse is real. Revenues are down nearly 50% in cities like Phoenix and Austin. Watch out for a wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse. What's scary for the US Housing Market is just how many Airbnbs there are. Data from AllTheRooms shows 1 million Airbnb / VRBO rentals. Compared to only 570k homes for sale. Creates huge home price downside if struggling Airbnb owners elect to sell. 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.

The pandemic is over. Fewer people are working from home / vacationing in states like Montana, Texas, and Tennessee. So the demand is way down. Just as the Airbnb supply went way up. So you get a crash. What will be interesting is how "stubborn" Airbnb owners are in holding their properties. Many of them are just now seeing their revenues down 50%. But the mainstream narrative hasn't caught up to it yet. So owners might not realize the Airbnb crash is a broader trend. Some Airbnb owners might elect to do a long-term rental in their properties instead. But the problem with that is that there has already been a huge surge in long-term rentals hitting the market.

So if Airbnb owners "pivot" to long-term rentals, they'll likely crash that market as well. Especially in dense urban areas. Which is where the majority of Airbnbs are located. I think "newbie" Airbnb owners who bought over the last 1-2 years with a mortgage are in trouble. They got in at a high price. And have a high monthly payment. And little margin for error. They could be some of the first to sell later in 2023 when the season ends. However, some of the more seasoned Airbnb operators who got in before the pandemic likely have room to work with. They paid less for their Airbnb. Have a cheaper mortgage rate. And more experience. They will be less inclined to sell.

The data used in this Tweet thread came from AllTheRooms. They're a short-term rental data provider who tracks Airbnb supply, rates, and revenue for every market in the country.

 

Tom, not sure of the date of that article.
Timing is everything…we’ll see.

JUNE 15, 2023
Michael Gifford
AZBIGMEDIA
5 reasons we won’t see a housing market crash anytime soon
The housing market is stabilizing in 2023, not crashing. Here are five reasons we won’t see a housing market crash soon.
1. Homeowners are reluctant to sell
2. Credit availability is exceptionally tight, and regulators removed faulty financial products
3. Mortgage delinquency rates are low
4. Home equity is at an all-time high which means foreclosures aren’t coming
5. The housing market is starved for inventory

If no housing market crash, what will happen in 2023?

Article HERE

 

It's an interesting discussion and one that Tom makes a valid point on. Airbnnb type arrangements were always folly in my mind. A little like chasing the Bitcoin crap. The off-hotel rental of residential housing was a bad idea from the get-go. What they did do was drive rental prices up as homes were gobbled up for use as temporary housing for vacationers to spend more than they were worth...but cheaper than over-priced hotel rooms. All of which created problems for those who couldn't afford to buy their own home.

It was a nightmare situation for those next door to them and even more troubling for those working in local areas that couldn't find reasonably priced housing to rent. I remember when we were trying to fix our CC&R's in 2018/19 we had a couple of discussions on attempting to deal with them and we were told the lobbyists for them were well healed and willing to fight. The pandemic changed life as we know it and clearly it is impacting the marketplace now.

If there is an upside, the senior market is far less fickle when it comes to national trends. The bigger problem is rental revenue has doubled from 10 years ago and i was always of the mind those investors owning multiple Sun City properties would cash out and sell them when the market peaked. While they still could, the long tern rental income is so outrageous they are making more money from it than by selling the property and collecting the interest from it in the bank.

In my humble opinion, it's why we have so many more renters/slash privilege card holders than we did 10 years ago. Our RCSC membership is far below where it used to be.

 

“The good news is home sales rose in June above the 2020 June figures by 7%.”
from Bill Pearson’s comment today, Sat. 7.01.2023, 4:20 pm on this other thread: https://talkofsuncity.com/threads/injustice.4597/page-5

 

Help me out eyes what did i say in the other thread? I know you can cut and paste so please humor me and show me what you are trying to say.

 

Bill, from the other thread, link referenced above, you wrote, “Well said IC and this story is yet to be completed. The good news is home sales rose in June above the 2020 June figures by 7%. Collecting the PIF from those owing is one thing, trying to take it from people who have already paid it or from heirs who took ownership and immediately put it on the market and sold it so as to collect it twice is as you said...
Simply immoral.”

Is that not positive crossover news to share on this thread discussing a potential housing crash nightmare impacting RCSC PIF revenue?
I’ll delete it if need be.

 

You’re fine eo, i just wsn’t sure what you were referencing? By the way i just got that info this morning and my first question was why? No answer yet and i don’t think interest rates have come down so not sure what is driving the bus. Kevin McCurdy at the meeting the other alluded to them being on track for their 1750 home sales. Personally I would love to see how it is generated.

I know we have been double dipping on both sellers and buyers in the case on inheritance and turn around sales. I’ve been told that shouldn’t happen but i can prove it has. That is troubling to me.