You read earlier this summer that for summer rentals on Cape Cod, demand was down, but prices remained high. Now The Wall Street Journal’s Jon Kamp reports that the scenario playing out in Cape Cod is happening in many vacation rental markets in America. He writes:
Andrew Davis bought a two-bedroom condo on Cape Cod last winter, fixed it up and listed it for rent in mid-June. After a pandemic-fueled boom made rental housing a scarce commodity in the Massachusetts vacation spot, something unusual happened: The property sat empty until July.
“It’s been a grind,” said Davis.
Stories like his are starting to pop up more on Cape Cod and at other coastal-vacation destinations, including on New York’s Long Island, according to real-estate agents and property-rental experts.
The Covid-19 pandemic caused people to look locally for vacation spots, but it also reduced inventory because people who often rented out their second homes in beach towns were using them instead, real-estate experts said. Now, as inventory rebounds, rental demand is spreading out across more listings, said Jamie Lane, chief economist at AirDNA, a short-term-rental analytics company.
Renters’ growing leverage means property owners are in some cases having to put in extra work to keep units filled.
“We’ve got to realize that 2020 through 2022 on Cape Cod were the years that we’re never going to see again,” said Ryan Castle, chief executive at the Cape Cod & Islands Association of Realtors. The prepandemic summers are a better baseline for the popular vacation spot, he said.
Jim Reese, chief operating officer at WeNeedaVacation, which lists rental properties on Cape Cod, Martha’s Vineyard and Nantucket, thinks demand has slipped from pandemic highs but remains above prepandemic levels. He recommends that homeowners take a cautious approach to pricing their listings now that renters have more options.
Pulling data from rental sites such as Airbnb, AirDNA in early July found occupancy rates through the next two months were largely lower across U.S. beachfront hot spots compared with the year-earlier period. The numbers suggest the shift is broad—on both coasts—and that rising inventory characterizes all kinds of rental markets around the U.S. in a rebound from pandemic lulls, according to AirDNA.
Some homeowners think demand has changed because people have less flexibility to work entirely remotely and vacationers once again are taking to the skies for more distant trips. But the rebound in housing inventory also can make the market look like it has more slack.
Action Line: High prices and low demand are an unsustainable mix. Look for this to correct itself one way or another at some point. Until then, if you’re spending the summer in or around Newport, RI, let’s talk.