A potential revenue crisis looms for Airbnb, the renowned platform that enables property owners to rent out their spaces to travellers, signaling trouble in the real estate market.
Recent data comparing Airbnb profits in the US in May 2022 and May 2023 reveals a significant decline in revenues for the San Francisco-based company, with cities like Phoenix, Arizona, and Austin, Texas experiencing a nearly 50 per cent drop. These figures indicate that Airbnb may be facing a developing crisis.
This alarming decrease in revenues raises concerns about a possible housing market crash, evoking memories of the infamous 2008 subprime crisis, which caused a severe economic recession in the United States.
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
Understanding the issue
- Homeowners who rely on rental income to cover their mortgage payments may face difficulties due to a reduced number of renters.
- The decline in Airbnb revenues, coupled with homeowners’ dependence on rental income, could potentially force them to sell their properties, in turn potentially leading to a housing market crash.
- Post-pandemic travel has slowed down, resulting in fewer people utilizing short-term rentals like Airbnb.
- During a period of low interest rates and high demand for short-term rentals, there has been an increase in the supply of Airbnb rentals, with more individuals listing their properties for short-term renting on platforms like Airbnb.
- The combination of increased supply and decreased demand can create market pressure.
According to Nick Gerli, CEO of Reventure Consulting, individuals who purchased homes when interest rates were lower may be able to retain their properties as their monthly expenses are relatively lower.