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The Canary in the Housing Mineshaft?

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By Vincenzo Iacovoni @ Shutterstock.com

What goes up must come down? This looks to me like the canary in the housing mineshaft. Gulia Carbonaro reports in Newsweek:

An unfolding revenue crisis for Airbnb, the popular service that lets property owners rent out their spaces to travelers, could trigger a housing market crash “on par with the 2008 subprime crisis” in some cities, according to a real-estate expert.

Revenues for the San Francisco-based company have dropped by nearly 50 percent in cities like Phoenix, Arizona, and Austin, Texas—suggesting that the company might be facing an unfolding crisis. This is according to recent data from AllTheRooms comparing Airbnb profits in May 2022 and May 2023.

“The Airbnb collapse is real,” tweeted Nick Gerli, CEO of Reventure Consulting, a company that offers advice to homebuyers and real-estate investors, on Tuesday while sharing the company’s data on revenues.

“Revenues are down nearly 50% in cities like Phoenix and Austin,” Gerli wrote. He added that the collapse in revenue for Airbnb might force homebuyers who had put their homes on its marketplace to sell their properties—and trigger a housing bust in some cities comparable to that of 2008.

“Watch out for a wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse,” Gerli tweeted.

Other cities that have seen significant drops this year compared to 2022 are Sevierville, Tennessee, where revenues have dropped by 47.6 percent; San Antonio, Texas, with a 43.8 percent decline in revenue; Nashville, Tennessee, with a 39 percent drop; Denver, Colorado, with a 38.6 percent drop; New Orleans, Louisiana, with 37 percent drop; and Seattle, Washington, with a 35.2 percent drop. All data was calculated as a three-month average revenue per listing for May 2023, compared to May 2022.

Gerli tweeted on Tuesday that the likely demise of Airbnb is “scary” for the U.S. housing market too, because of “just how many Airbnbs there are,” compared to homes listed for sales.

Action Line: Many investors attracted to income may have piled into the short-term rental market, but that sort of cyclical income isn’t necessarily the same as a steady stream of income from stocks and bonds. When you’re ready to talk about building a portfolio of income-generating securities, let’s talk.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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