The Effects of Airbnb on the Real Estate Market
Airbnb is an online community marketplace that connects people looking to rent their homes with people who are looking for accommodations. Homeowners are moving their properties from long term rentals to short term rentals aimed for tourists and temporary visitors. This is both beneficial for hosts and guests. Renters can save cost rather than staying at a hotel while homeowners can earn more with daily or weekly compared to renting it long term.
With the increase in demand of short term rentals, companies like Airbnb affected the real estate market in some ways.
Short term rentals have become a trend nowadays. It’s more convenient for homeowners when it comes to maintenance. With this trend, they can also inflate their prices for charging more on daily rates. Property investors are competing with homeowners. They would invest in properties where the location would be on demand for rentals and compete with the prices of homeowners. Several property owners are taking off their listings and migrating them to Airbnb for a better marketing strategy.
Less Availability for Long Term Rentals
In areas where there is high growth of AirBnb, owners are shifting from long term rentals to short term which decreases the opportunity for those looking to rent long term. For example, if a renter wants to stay in a condominium for at least 6 months, it makes him harder to find this kind of set-up since most condominiums are being rented on a short term basis and being charged at a daily rate instead of monthly. If the renter rents this condo at a daily rate, it’s much more expensive than a monthly rate, even twice as much.
AirBnb is growing over the years. It’s constantly expanding and because of the trend, rental rates are significantly higher as well. Most properties are charged per night which is usually higher than long term rental. Property owners need to compete with other owners, so they are taking their listing off of the traditional real estate sites and moving them to Airbnb since it’s more lucrative to earn short term than long term.