Analyst warning of local Airbnb collapse says Austin has more rentals than homes for sale
AUSTIN (KXAN) — Austin-based housing consultant Nick Gerli stands by his viral tweet thread from Tuesday, which claims that a short-term rental (STR) collapse is happening in Central Texas, despite contradictory data brought by STR data analysis company AirDNA.
AirDNA is a direct competitor to Alltherooms, who provided the data for Gerli’s analysis. AirDNA provided its results alongside Alltherooms’:
Gerli, CEO of Reventure Consulting, said that he received Alltherooms’ data around a month ago and dug into it.
“I found that a lot of cities in America had pretty big declines in Airbnb revenue per listing,” Gerli said. “According to this data, in some of these markets, there were as much as 40 to 50% declines in revenue per owner, which shocked me — I was like, wow, the Airbnb market is crashing.”
The main takeaway that he found was an “explosion” of supply; Austin’s STR listings jumped from under 8,000 to more than 12,000 in just a couple of years.
“That huge surge in supply, increased more than demand, which caused the revenues to go down for individual owners,” Gerli said.
AirDNA’s findings also show unbalanced growth in STR supply and demand, but with a smaller margin in revenue change than Gerli found.
“For more context on Austin, the supply of available short-term rental listings in the MSA increased 16% from May 2022 to May 2023, while demand increased 7%,” said AirDNA in a Wednesday statement, “This extra competition meant that occupancy decreased by a small amount over the same period, even though demand is still strong.”
Gerli said he worked with AirDNA’s data after they responded to his tweets.
“It seems like good data, I can’t actually tell you what’s driving the differences in these two data sources. I’m trying to get to the bottom of it myself,” said Gerli, noting that he reached out to Airbnb to help them settle the argument. “I know both of these companies to be reputable sources. So I’m interested to see why the differentials exist.”
However, an Airbnb spokesperson said that the company cannot provide that data.
“As we said during our Q1 earnings, more guests are traveling on Airbnb than ever before, with Nights and Experiences Booked growing 19% in Q1 2023 compared to a year ago,” Airbnb said in a Wednesday statement.
Hotels data shows
Local tourism bureau VisitAustin provided KXAN with data about Austin’s hotels, comparing the periods of January to May 2023 with January to May 2022.
In comparison to 2022, Austin’s hotels grew in supply, demand and revenue during the first five months of 2023.
Unlike the STR data from Alltherooms and AirDNA, the growth in demand (+4.7%) for hotels exceeded supply growth (+3.2%). A hotel takes significantly more time to build than a unit of housing can become a STR.
Local hotels also grew their revenue by 10.1% and average daily rate grew by 8.5%, according to VisitAustin’s data. Both variables are used alongside occupancy as key variables in the hospitality industry.
In order to compete with hotels, Gerli said that Hosts need to provide an experience and more than just a place to stay.
“It needs to be really nice on the inside, well-decorated, stock supplies for your guests and do not try to nickel and dime them on cleaning fees,” Gerli said, “And do not try to make them vacuum and take out the trash when they leave. I think that’s the number one thing I hear from people who are frustrated with staying in Airbnbs.”
Reactions show anger at STR supply growth
Still, reactions to Gerli’s tweets found purchase with the site’s users, he said.
“The most general reaction is that a lot of people don’t like the idea that lots of people purchased Airbnbs in the last two to three years, increased the Airbnb inventory and took inventory off the for sale housing market,” Gerli said.
Inside Airbnb, a web project by “residents and activists who are fighting to protect their communities,” claims that 14,368 Airbnb listings exist in Austin and that 5,451 listings have been vacant over the last year.
It also claims that around 51.0% of entire unit listings are owned by Hosts with at least one other listing, and that some of the multi-listing Hosts are businesses advertising “flexible apartments,” such as Blueground, Landing, Evonify Stays and Vacasa Texas. Each of those businesses are shown as owning more than 100 homes or apartments.
However, some of the multi-listing hosts include “Jen and Steven,” “Martin” and “Shirley.”
“On one hand, Airbnb is providing an existing homeowner a way of making some additional money off their house. I think that’s a good thing, especially if someone is struggling with property taxes or expenses, they can make a bit of extra money and keep their house,” Gerli said. “But on the other hand, you have these companies and these individuals who bought up 10 [or more] Airbnbs. In a city, that’s probably not good for the health of the local housing market and society.”
By Gerli’s estimate, Travis County has 2.5 Airbnbs for every unit of for-sale housing. He suggests that the adoption of licensing and a quota system to control the amount of licenses available each year.
Whether a correction or a collapse, he’s optimistic about the future of the housing market.
“A lot of people are frustrated with the housing market,” Gerli said. “Lots of houses were bought up by investors over the last several years and a lot of that supply is sitting in what I call ‘shadow inventory’ in the background in the market. I think relief is on the way. I have more of a positive outlook for homebuyers into the future. I think it’s gonna get better for them.”
Source: KXAN.com
