The Short-Term Rental Mark Goes Long

COVID-19 continues to reshape the real estate market—this time, it’s altering the short term rental market. According to a report by realtor.com, owners are transitioning properties from daily or weekly Airbnb and Vrbo rentals to seasonal rentals, securing leases of one to three-months in duration.

This spike in seasonal rentals is showing up in certain tourist destinations: Nashville (185%), Austin (160 %), Orlando (82%), Las Vegas (56%), Chicago (49%), San Antonio (49%), New Orleans (48 %), Honolulu (47%), Jacksonville (42%) and Bridgeport/Stamford, Connecticut (35%). Since the end of February, these locations saw an average increase of 74% in seasonal rentals, while seasonal rentals in the top 100 U.S. cities rose only by 21%.

Renting out a home for one to three months represents a “massive change” for owners who were accustomed to much-shorter term renters, reports realtor.com. But the uncertainties posed by COVID-19 makes longer term rentals an economic necessity.

“Many short-term vacation rental owners rely on rental income to pay the property bills and meet their mortgage obligations,” said George Ratiu, senior economist at realtor.com. “If people aren’t traveling or don’t feel comfortable staying in someone else’s home, that lost income could lead to missed payments or even foreclosure. For this reason, owners are looking for seasonal renters, who can provide occupancy and income for a longer period and give owners the breathing room to weather the current drop in short-term demand.”

Unfortunately, this change isn’t adding inventory to the housing market, which has been down 19% nationally in the last year. Nor is it likely to help long term renters looking for an affordable home.

“In the short-run, it’s unlikely that we’ll see many of these units turn into more traditional rentals, as owners can likely make more money with seasonal furnished rentals. However, the longer COVID alters consumer behavior, the more difficult it will be for vacation rental owners to cobble seasonal leases together, and this could eventually mean an increase in for-sale inventory in these markets,” said Ratiu.