The short term rental market in the United States is on the upswing in 2024.
June saw a nearly 10% increase in demand compared to last year, and for the first time since the pandemic, occupancy levels exceeded those of 2019.
This means more people are choosing short term rentals for their vacations!
What’s Driving the Upswing?
- Improved Economic Conditions
More people are willing to spend money on travel because the economy is stabilizing and inflation is cooling down.
The Federal Reserve is even considering cutting interest rates, which could make mortgages cheaper, potentially lowering costs for property owners.
- Fewer New Rentals
Fewer rental properties are entering the market, which is good news for existing owners, because it means current rentals are in higher demand and can charge more per night.
- Seasonal Trends
The summer travel season is particularly strong this year.
The Labor Day Holiday dates might shift some travel from September, making August especially busy.
What does the Short Term Rental Property Market Heating Up Mean for you?
– For Travelers: The sooner you book your rental, the better! Demand is high, which means prices could go up.
– For Property Owners: There is more demand for your home, so you could potentially raise your rates.
Looking Forward: 2024 and Beyond
Even with current high mortgage rates, the demand for short-term rentals is set to grow.
By the end of 2024:
- Demand could increase by around 5.9%, and even more in 2025. This is driven by a combination of stable economic conditions, more people feeling comfortable traveling, and a balanced supply of available rentals.
- Occupancy rates are stabilizing! This means more properties are being rented out, which is good news for owners.
- Average Daily Rates (ADRs), or the average price paid for a rental per night, have gone up by 2.8%, and it looks like we’ll see a 2.0% increase for the entire year. The increase in ADRs reflects a healthier market where people are willing to pay more for quality rentals.
Challenges and Considerations
The Short Term Rental is looking good, but there are a few things to be aware of:
- High mortgage rates continue to make it expensive for new investors to enter the market. This could limit the growth of new properties, keeping supply tight. However, for current owners, this means less competition and a stronger market position.
- While the Federal Reserve may cut interest rates, these changes take time. So, while a soft landing is possible, it’s not guaranteed. It’s important to remain cautious.
The U.S. short-term rental market is thriving in 2024, with strong demand, limited new supply, and increasing rates.
This creates a favorable environment for both travelers and property owners!
For more detailed insights and data, you can explore AirDNA’s June 2024 review and AirDNA’s Mid-Year Outlook 2024-2025