Short Term Rental Trends in 2024
In the United States, there are over one million short-term rental listings.
You may have heard that the short-term rental market has crashed or is not performing as expected. Taken out of context, some aspects of this alarmism are true, but the whole picture is more complex.
Let’s break down what has shaped the short-term rental market and what you can expect as 2024 rolls on.
In the United States, there are over one million short-term rental listings.
You may have heard that the short-term rental market has crashed or is not performing as expected. Taken out of context, some aspects of this alarmism are true, but the whole picture is more complex.
Let’s break down what has shaped the short-term rental market and what you can expect as 2023 rolls on.
Market Shakeup
There’s no denying that the short-term rental market has faced challenges since the 2020 pandemic. While many investors and owners who were unwise with their decisions and unaware of proper management techniques failed, the market rebounded in a big way.
The main culprit of this trend is Airbnb. Before the pandemic, the demand for Airbnbs was high, and once quarantines were lifted, that demand returned. Many poorly invested owners were hit hard by the lockdowns, but they were also provided stimulus money.
The reality is that short-term rental is not the problem. The issue resides with some of the owners who thought Airbnb was a solution to every problem. It can be argued that Airbnb has experienced a downturn, but other businesses in the same field are not experiencing the same problem.
What Changed?
Part of what changed to establish this trend was errors in property management. A lot of people who invested in properties to turn them into Airbnb attempted to manage their own properties. They had no experience in property management and made many common mistakes.
Another issue is that there is a structured fee arrangement with Airbnb that many customers find troublesome. This led to a precipitous decline in the number of Airbnbs being rented and has led to some revitalization of the hotel and motel market.
The facts point us to the reality that it is not all Airbnbs or short-term rentals that experienced a decline since the pandemic. Those that are not properly managed or marketed did. People are not interested in paying exorbitant fees for cleaning and maintenance when they rent short term.
The Short-Term Rental Market
The short-term rental market is showing several signs of improvement going into 2024. Rentals have a lot of promising indicators on the horizon. Some of these signs will benefit renting more broadly, while others are focused on the short-term market.
New Home Formation is continuing to outpace growth in the housing market. That means more kids are moving out and establishing families than there are new homes being built.
Remote work trends continue to favor mobile workers. These workers are much more connected to the internet and willing to travel. They can afford to travel because remote work gives them the option of being able to continue work while they visit new places.
A new focus on work-life balance is driving people to take longer and more frequent vacations. This trend doesn’t seem to be abating, with many adults enjoying a newfound connection to their families and friends.
The short-term rental market is also thriving in places where people want to visit. During the pandemic and stimulus years, this extra influx of money drove the market to unsustainable heights. There were short-term rentals popping up in places where people go for leisure travel.
A focus on locations that have incentives for vacationers shows that there is a strong demand for short-term rentals. That demand does appear to be increasing. There is one big caveat that has to be monitored, and that is inflation.
With inflation rising, there is some concern that daily expenses will put pressure on vacation budgets. That means those who are able to accommodate cheap, fixed rates for their customers will be able to reap great benefits. This is a great example of letting the economy work for you instead of against you.
Property Management
As said before, one of the main drivers of growth was unrestrained stimulus spending. The reality of the economy now looks far different. Those who did not know how to manage their properties are being culled out of the market. This leaves room for wise investors to grow their portfolios.
Don’t get fooled, short-term rental businesses are experiencing some difficulties. With the trends going into 2024, the ability to be agile and responsive is going to be important. Financial coaches and others sold a bill of goods to many investors that saw them overextend themselves.
If you want to have a successful short-term rental business, the key is property management. You want someone who has years of experience and is able to make the best choices for your properties. You need to be kept in the loop, but it takes years of professional experience to be an expert at property management.
You can turn to Red Wagon Properties if you want to build up your short-term rental portfolio. The professionals at Red Wagon have been in the market for decades, and we understand what it takes to be successful.
The money is still out there to be made, and throughout 2023 the demand is going to grow. If you’re ready to move forward into the short-term rental market, let Red Wagon Properties help guide and manage your properties.
Contact us if you have any questions.
