2023 provides opportunity to get ever closer to achieving real estate goals. The previous two years rewarded short-term rental property investors as travelers opted for whole home options instead of single room hotels. This trend waned in the last quarter of 2022 and many investors began transitioning their short-term rental properties to long-term rentals in an effort to maintain previous revenue streams and cover all expenses. Four indicators provide insight into the next year. Beyond Pricing, AirDNA, Mashvisor, etc. caution investors of an economic downturn in 2023 and significant decreases in short-term rental demand and price per night in the short-term rental market. Amazon announced layoffs of approximately 18,000 and Salesforce announced layoffs of approximately 8,000. Inflation remains around 7%. Lastly, many large corporations warned of failing to meet earning expectations. These indicators provide the opportunity for short-term rental property owners and investors to evaluate their current positions and reconsider future decisions.
The short-term rental market in North Carolina provides information on current and past properties metrics to help owners and investors utilize specific market data to further understand what the indicators might mean moving forward. The below graphic shows the current Airbnb occupancy rate for Fayetteville, NC.
Provided by Mashvisor and Military First BnB Solutions
The lack of green color demonstrates rates at or below 50% This information should be combined with the slow booking season run from approximately the months of October to February in the greater Fort Bragg area. Contrast this above graphic with the below graphic centered near Southern Pines and Pinehurst, NC.
Provided by Mashvisor and Military First BnB Solutions
A similar occurrence of low occupancy rates and decreased revenue opportunities exist across all advertised properties appear in this area. This begs the question, “What caused these trends and how long will they continue?”.
The occupancy data provides a few trends that might provide some insight into the current market situation. First, consumers are hyper-focused on the total costs of their stay, and Airbnb responded to this by introducing a new booking feature allowing for sorting by total price at the time of booking. Second, single family homes book more often than multi-family and townhome properties. Third, consumers seem to be ruling out properties for a single feature they do not like. Fourth, Airbnb announced November 30,2022, that it has partnered with apartment complexes to leverage vacant properties. Lastly, inflation and layoffs seem to indicate business travel will be slowing down in 2023. While the information might indicate a bleak future for the short-term rental market, it provides opportunities for current and future investors.
The bleak information reinforces that the real estate rewards people with long-term visions. Many property owners have begun to remove their properties from the short-term market because an increased demand for long-term properties and rent escalation. These actions should rebalance the short-term rental inventory making it more appropriate for current and future demand. It’s also important to remember that the high season starts in February and runs through September. Evaluation of revenue for an entire 12 month period provides might provide more insight than radical decisions during the known 3 month slow period in North Carolina. February and March already indicate increased occupancy rates and opportunity to increase nightly rates.