STR Rental Prices Falling and Inventory Opening Up, Anyone else noticing the same?

Investor · VA MD, NC · Member since 2023 · 35 posts · 17 votes

I've been looking at short-term rentals and noticed just recently more inventory has come on in the market at least in Massanutten Resort. Wondering if anyone else that's looking at short-term rentals as noticed an increase in inventory and price reductions starting to happen? My assumption is the supply of STR and people listing them have pushed ADR down and now interests rates don't justify the purchase price thus price reductions. Wondering what everyone else is seeing out there

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Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

I think most of what you said applies to all types of real estate at the moment.

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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
For sure.
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Kristofer Kretsch
Member since 2020 · 11 posts · 13 votes
3y
I'm not in STR's for full disclosure. I do LTR's but have been considering MTR's in my area due to regulations banning STR's. The question I keep wondering is whether STR's will be cyclical like the hotel industry. CNBC did a piece a few years back now (but it can probably be found on YouTube), about how most major hotel chains (Marriot, Hilton, IHG) are basically just booking platforms (they own very few physical real estate assets). Implying that the main difference between them and AirBnB, VRBO, and STR platforms is type of building and the ownership (individual investors rather than large commercial real estate investors). Don't get me wrong, I'm not anti-STR, but am just wondering if STR's are cyclical. I think if we do go through the "Air BnBust" as it's called on social media, it's probably just a normal downturn, not a bust. It will be like normal business cycle, and as other's have mentioned, locally dependent.
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John Carbone
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Kristofer Kretsch:

I'm not in STR's for full disclosure. I do LTR's but have been considering MTR's in my area due to regulations banning STR's. The question I keep wondering is whether STR's will be cyclical like the hotel industry. CNBC did a piece a few years back now (but it can probably be found on YouTube), about how most major hotel chains (Marriot, Hilton, IHG) are basically just booking platforms (they own very few physical real estate assets). Implying that the main difference between them and AirBnB, VRBO, and STR platforms is type of building and the ownership (individual investors rather than large commercial real estate investors). Don't get me wrong, I'm not anti-STR, but am just wondering if STR's are cyclical. I think if we do go through the "Air BnBust" as it's called on social media, it's probably just a normal downturn, not a bust. It will be like normal business cycle, and as other's have mentioned, locally dependent.

I'm curious to know which markets are UP YOY on STR with a large data set, not just a random lake house.
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Daniel Netzer
Developer · Bend · Member since 2023 · 64 posts · 12 votes
3y
Quote from @John Carbone:

Quote from @Kristofer Kretsch:

I'm not in STR's for full disclosure. I do LTR's but have been considering MTR's in my area due to regulations banning STR's. The question I keep wondering is whether STR's will be cyclical like the hotel industry. CNBC did a piece a few years back now (but it can probably be found on YouTube), about how most major hotel chains (Marriot, Hilton, IHG) are basically just booking platforms (they own very few physical real estate assets). Implying that the main difference between them and AirBnB, VRBO, and STR platforms is type of building and the ownership (individual investors rather than large commercial real estate investors). Don't get me wrong, I'm not anti-STR, but am just wondering if STR's are cyclical. I think if we do go through the "Air BnBust" as it's called on social media, it's probably just a normal downturn, not a bust. It will be like normal business cycle, and as other's have mentioned, locally dependent.

I'm curious to know which markets are UP YOY on STR with a large data set, not just a random lake house.
AirDnA has excellent data on this. The norm seems to be that most collective markets are trending up quite well, but are just overrun with supply, so individual STRs are making less on average due to the low barrier to entry in these markets + airbnb arb influencers promoting the hell out of it.
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Nick BelskyBusiness Member
Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
3y
@David Hathaway
The strength of the STR depends on the market. Sub markets are hurting for sure, but the prime markets are still thriving. General rule of thumb, anything near a National Park will almost always keep vacancies up. i work with several investors who own near the Smokies, Yellowstone, etc... and they've seen little to no reduction in vacancies over the past few years. Other markets, such as Hot Springs, AK, investors are frantically trying to sell with no luck.
From what I've seen, the stronger markets are holding their own despite the general markets. I've seen little slow down on investment financing over the past 2 years. Others will argue, but investors I work with haven't slowed much at all. Plenty of deals out there if you know how to find them and make them work I'll fall back to the old adage, rates are relative, location is not. You can always change the rate.
Cheers!
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Matthew Masoud
Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes
3y
We operate STR/MTR out of multifamily apartments. So we don't have the typical vacation "house".
Our Florida properties were seeing a decrease in occupancy so we had to adjust our pricing. Margins are smaller but still very profitable.
Our STRs in smaller markets are unchanged (Dayton, Raleigh, Tuscon).
Some markets are oversaturated and many people purchased property that doesn't pencil out as long term rentals. Those people will be in trouble if this trend continues.
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Ryan Thoma
Member since 2022 · 12 posts · 7 votes
3y
Data has so far been steady in the corner of New England I'm in but then again this area was a popular vacation destination before STRs even existed so maybe flawed. In any case, the rates took time to sink in it appears and I'm not surprised to see a cooling. Personally, I expected it to be more drastic.
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