There are a number of businesses struggling due to the existing global pandemic – travel and tourism is one of the industries that was hit the hardest. A residual of the COVID-19 impact on travel is a significant decline in short-term property rentals. As millions of travelers canceled their travel plans, vacation rental platforms like Airbnb and Vrbo saw immediate declines in bookings during March and April. With the expectation that the decrease in short-term rentals will continue, we are seeing a high volume of short-term rentals for sale.
High season for tourists in Phoenix is spring, but with shelter-in place orders across the United States beginning in mid-March, the Valley saw little to no visitors during the past few months. As a result, many short-term rental property owners looked at transforming their short-term rental units to traditional lease options or made the decision to list the property for sale. Greg Hague, a real estate broker and owner of Hague Partners and 72Sold, stated that his company listed a large volume of former short-term rentals for sale during March and April. For investors unable to float expense without a source of income, selling the property is a viable option.
Hague states, “The damage is done because they missed the season by having these bookings cancel immediately. And it’s very tough to rent Airbnbs in the summer in Arizona for obvious reasons,”
Airbnb reported that several of its hosts opened their properties to longer term stays. Recent statements from Airbnb noted an uptick in rentals since mid-May, but homeowners with investment properties are still weighing their individual situations and the risks long term.
Owners of the rental properties must cover expenses such as mortgage, maintenance, utilities and property taxes. Many of these owners rely heavily on tourists migrating to the Valley to afford to pay their bills. According to airdna.co, 90% of the global short-term rental units reserved in April were cancelled. Additionally, the Wall Street Journal reported that Airbnb saw $1.5 billion in cancellations this spring. Real estate professional Greg Hague predicts that the short-term rental industry will continue to face challenges. Travelers may begin to prefer traditional hotels as opposed to renting properties from Airbnb or Vrbo, as hotels will have consistent deep-cleaning procedures to ensure guests a safe stay.
For those using vacation rentals as a main source of income as opposed to supplemental income, it may be time to consider selling and taking advantage of increasing home prices. For those that want to hold investment properties, companies like Airbnb are working to accommodate their hosts impacted by COVID-19. The vacation rental platform invested $250 million USD in efforts to support hosts that have faced cancellations.
For sellers, the situation may present an opportunity to liquidate properties while overall inventories are low and home prices are rising – especially in the market segment for homes under $500 thousand. For homebuyers, this is also an opportunity to purchase a short-term rental for sale for themselves or as an investment. Short-term rentals are often updated and clean and located in desirable neighborhoods – nearby shopping and restaurants.
If you are purchasing a home and you need escrow and title services, Landmark Title experts are available to help. To learn more about Landmark Title and its services visit ltaz.com.