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Airbnb owners are about to cause a massive housing crash in certain cities across America in 2023 and 2024. The central issue that will cause this Housing Crash is Airbnb Bust, the new trend where revenues for Airbnb owners have plummeted by as much as 50% in areas like Phoenix, Austin, and Tennessee.
Plummeting Airbnb revenues is a big problem because lots of investors bought up Airbnbs over the last several years and heavily increased the supply. There are now roughly 1 million Airbnbs / VRBO rental in America compared to only 570k homes for sale.
Data from AllTheRooms: https://www.alltherooms.com/
Reventure App Article: https://www.reventure.app/blog/what-the-hack-is-happening-in-phoenix-50-inventory-drop-in-6-months
Going forward we are likely to see many of these owners sell to avoid taking further losses on their Airbnb. Especially because many investors bought up short-term rentals with subprime mortgages, specifically called DSCR Loans. These loans don't require income verification from the borrower and are collateralized by the income profitability of the property.
Which is now becoming an issue in areas like Sevierville, TN, where Airbnb revenues have declined by 50% over the last year. This market in eastern Tennessee was a hotbed for Airbnb purchases with DSCR loans and now there are nearly 10x as many short-term rental listings as there are homes for sale - a concerning signal that suggests inventory in this market will spike and prices will decline.
Airbnb owners might also elect to rent their properties long-term, which could cause even more vacant rentals to hit the market in cities like Phoenix, Austin, and Nashville. Which would put downward pressure on rental rates and eventually cause home prices to go down by more.
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