Changing short-term rental markets
By : J. David Chapman/January 16, 2025
In previous columns, I have discussed our portfolio of short-term rentals (STRs) and shared insights on purchasing Airbnb stock when it went public. I have also explored the positive and negative impacts STRs have on communities, debated the merits and drawbacks of municipal STR regulations during my tenure as an Edmond city councilman, and assessed the role of real estate professionals in the STR market as an Oklahoma real estate commissioner. Having owned STRs for over 20 years and taught this concept at UCO for nearly as long, I have enjoyed analyzing and commenting on the changes in this evolving market. The year 2024, in particular, brought significant shifts in the STR landscape.
The Airbnb model revolutionized travel and provided homeowners with new ways to monetize their properties. However, despite its initial boom, 2024 saw a growing trend of individuals selling their STRs. The reasons behind this shift are varied, encompassing financial, personal, and industry-related factors.
Financial considerations play a substantial role in the decision to sell STR properties. Initially, many homeowners viewed STRs as lucrative investments, drawn by the potential for substantial income. However, as more properties have entered the market, competition has intensified, leading to declining profit margins. Additionally, rising costs associated with maintaining and managing STR properties—such as cleaning fees, insurance, and property taxes—have diminished their financial appeal for some hosts. Faced with these challenges, many property owners have opted to sell their STRs, aiming to recoup their initial investments or pursue more profitable real estate opportunities.
Personal factors also influence decisions to exit the STR market. Hosting guests can be demanding and time-consuming, requiring constant communication, coordination, and property upkeep. For hosts with busy schedules or other commitments, these responsibilities can become overwhelming. Moreover, the ongoing need to secure bookings and maintain positive reviews adds another layer of stress and pressure. As a result, some individuals choose to sell their STRs to regain personal freedom and reduce the burdens associated with hosting.
Interestingly, the return of STR homes to the traditional rental market or their availability for purchase by owner-occupants can have positive effects on neighborhoods. STR properties are often among the best-maintained and most-renovated homes in their communities. Their transition back into the long-term rental pool or owner-occupied housing contributes to increased housing affordability and fosters stronger community ties.
J. David Chapman, Ph.D., is professor of finance & real estate at the University of Central Oklahoma (jchapman7@uco.edu).