DataDigest: Airbnb Inventory And Impact

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DataDigest: Airbnb Inventory And Impact

Jul 13, 2023 | News | 0 comments

There was a widely circulated tweet from Nick Gerli, a popular YouTube influencer in the field of housing. You may have come across it. In the tweet, Gerli refers to information provided by a company named AllTheRooms to argue that the Airbnb/short-term rental market is experiencing a significant downturn, which will consequently affect available inventory.

The shared chart is concerning, showing a significant drop in revenue of nearly 50% in certain markets. However, doubts arise regarding the reliability of the data. Jamie Lane, the chief economist at AirDNA, analyzed both the AllTheRooms data and AirDNA’s own data, revealing that while there has been a decline in revenue per listing, it is not as drastic as initially claimed.

Gerli remains pessimistic about the situation, providing his high-level thoughts. He explains that both data sources agree on the surge in Airbnb supply in the US, particularly in cities like Phoenix, with 2-3 times more homes listed on Airbnb than for sale. This abundance of Airbnb inventory has affected the housing market’s available inventory. Gerli predicts that as the Airbnb correction continues, struggling Airbnb owners will likely sell their properties, leading to a worse downturn in cities with the highest revenue decline and an abundance of available Airbnb listings compared to the number of homes for sale.

Contrary to the notion of a “crash,” Jamie Lane at AirDNA does not foresee such an event taking place. While there has been a downward trend in revenue compared to last year, Lane acknowledges that certain metropolitan areas are relatively saturated with listings (with an 18% increase in the number of listings compared to the same period last year).

AirDNA anticipates modest declines in Airbnb revenue for the remainder of the year, projecting a 1% decrease. Additionally, they do not foresee any growth in revenue for 2024.

Lane stated that, importantly, the revenue for most hosts nationwide is still robust, which lowers the probability of hosts being compelled to sell. Additionally, he argued that an influx of Airbnb listings would not cause a severe crash, even in saturated markets.