Home Prices May Be Falling, But Are They Affordable?

San Bernardino County in California is conducting a comprehensive study to evaluate the impact of how short-term rentals affects housing availability in the county. 

San Bernardino is home to Big Bear Lake, one of the top vacation rental destinations in the state. A recent Southern California News Group analysis revealed that only 29 out of California’s 538 cities and towns meet the state’s affordable housing requirements, underscoring the need to address housing concerns within the county. The county introduced measures, including a temporary 45-day pause on new approvals for short-term rentals. It also imposed restrictions in desert and mountain communities, such as limiting new permits to two per individual and implementing occupancy limits of up to 12 guests based on dwelling size. And penalties are 10 times higher in San Bernardino than they were in 2021.

It’s interesting to note what is happening in the short-term rental and housing markets in Big Bear. We’ve been over this. An increase in active listings compared to occupancy levels puts pressure on revenue per available night. 

Average Revenue Per Available Night and Average Active Listings in Big Bear, 9/2021 to 6/2024

Source: Rabbu

Average Monthly Revenue for Short-Term Rentals in Big Bear, California

Source: Rabbu

Meanwhile, the median home sale price has fallen, fewer homes were sold compared to last year and they remain on the market longer. 

Source: Redfin

Does this imply that the short-term rental market and real estate mimic one another? Perhaps, but that would be an overestimation and most importantly, an oversimplification. Not all supply is the same — and professionally managed properties seem to do just fine. But many individual hosts who entered the market during the Covid boom are exiting the market. 

As regulation calls for higher taxes and penalties, it simply has become unfeasible for a lot of self-managed properties to keep bringing in the revenue they did two years ago. And these home sales are a prime opportunity for investors to lap them up and keep them as rentals.

As Paul Kromidas, CEO and co-founder of STR operator Summer told Skift, those who were “touring” the industry — trying their hand at owning and operating short-term rentals — will slowly leave the market, putting those homes up for sale. And it’s anybody’s guess as to who can afford to buy.

The U.S. housing market is seeing mortgage rates rising by more than 22% from this time last year, and according to Zillow, the average house price in America is up 1.2% to $348,853, with pressure mounting on those who bought properties to rent.

How this all affects housing affordability is the answer we await. But it’s very likely that investors still get the first pick of homes on the market. 

South Carolina’s Record Revenue

While Big Bear wrestles with rental revenue, South Carolina’s is beating records. Strong consumer demand has proven to be lucrative for hotels and vacation rentals in South Carolina. The 2023 fiscal year saw record revenue in this sector, according to the latest data from the South Carolina Department of Parks, Recreation & Tourism. Revenue Per Available Room (RevPAR) has risen by 12% for hotels and an impressive 35% for vacation rentals compared to pre-pandemic levels. Rental Nights Sold has also increased, with a 4% growth for hotels and an incredible 68% growth for vacation rentals compared to 2019. Additionally, outdoor recreation also outperformed pre-pandemic levels, with South Carolina State Parks reporting record RevPAR on their campgrounds for the fiscal year.

Vote Down for Vacasa?

In Vacasa news, Mossytree Inc., a major shareholder, sold 50,000 shares of Vacasa stock for $0.69 per share, resulting in a total transaction valued at $34,500. After the transaction, Mossytree Inc. still held 1,528,938 shares in Vacasa, valued at $1.05 million. Vacasa will report its next earnings report on August 8.

New York City Reacts to Airbnb Vans

After a New York Daily News exposé, three custom vans used as curbside lodgings without showers on the Upper East Side have been removed from short-term rental site Airbnb. An Airbnb spokesperson confirmed that the listings were taken down following an investigation, as the website’s rules prohibit rental listings on public land.

The vans, with listings titles like “Lovely rv place,” “NYC Van Experience,” and “The NYC RV,” had been available on Airbnb since February and were a source of concern for neighborhood residents. Complaints included guests resorting to public urination and defecation. The vans featured a bed, small sink, and toilet between the two car seats, with a sign urging guests to only use the toilet for emergencies.

Councilwoman Julie Menin of the Upper East Side had asked Airbnb to remove the listings and is working with the New York Police Department on a further investigation. Menin emphasized that city streets should not be used illegally for Airbnb rentals, especially in densely populated residential areas.

Elsewhere on Skift

Skift just turned 11. We started Skift on July 30, 2012, and set out to define the future of travel. We reported when the industry made bold, innovative moves – and called out missteps and wrongdoing. 

Watch CEO Rafat Ali identified five large themes that will have a huge impact on travel for years to come.

Skift at 11: 5 Big Themes Shaping the Future of Travel