Fall in Airbnb Listings Revenues Sparks Housing Market Crash Fears

Falling revenues per listing 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 one real-estate expert—though others questioned the data.

Revenues per listing for the San Francisco-based company have dropped by nearly 50 percent in cities like Phoenix, Arizona, and Austin, Texas. This is according to recent data from AllTheRooms comparing Airbnb revenues per listing in May 2022 and May 2023, though other sources contest these numbers.

Economist Jamie Lane, senior vice president at AirDNA, a company which tracks performance and monitors trends in short-term rentals, argued that the data from AllTheRooms is inaccurate, and that while revenues per listing are down for Airbnb in 2023, they have not dropped by 40 percent—but by just above 3 percent.

In a statement to Newsweek, Airbnb said: "The data is not consistent with our own data. As we said during our Q1 earnings, more guests are traveling on Airbnb than ever before, with Nights and Experiences Booked growing 19 percent in Q1 2023 compared to a year ago."

On the other hand, Nick Gerli, CEO of Reventure Consulting, a company that offers advice to homebuyers and real-estate investors, believes that—based on AllTheRooms data—"the Airbnb collapse is real."

"Revenues are down nearly 50 percent in cities like Phoenix and Austin," Gerli tweeted on Tuesday while sharing the data on revenues per listing. He added that the collapse in revenues per Airbnb listing 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, according to AllTheRooms, 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 issue was "scary" for the U.S. housing market too, because of "just how many Airbnbs there are," compared to homes listed for sales.

"Data from AllTheRooms shows 1 million Airbnb/VRBO rentals" in the U.S.," wrote Gerli. "Compared to only 570k homes for sale. Creates huge home price downside if struggling Airbnb owners elect to sell."

In the case of Phoenix, Gerli wrote, the number of short-term rentals, estimated at 18,000, is "more than double the number of for sale listings," estimated at 8,000. "Mix the huge Airbnb supply with revenues down -50% and you get a cocktail for massive forced selling," he tweeted.

In Sevierville, the eastern Tennessee city that topped Airbnb's revenue declines list, Airbnb listings are 10 times more than the number of homes listed for sales. "Yikes," commented Gerli.

All the areas where Airbnb's revenue losses per listing have reached levels close to 50 percent—eastern Tennessee, central Texas, the Pacific Northwest and the Mountain region—are likely to see less-seasoned Airbnb owners being forced to sell.

"I think 'newbie' Airbnb owners who bought over the last 1-2 years with a mortgage are in trouble," Gerli wrote. "They got in at a high price. And have a high monthly payment. And little margin for error. They could be some of the first to sell later in 2023 when the season ends."

On the other end, more-seasoned Airbnb owners might be more reluctant to sell, despite the loss in profit, Gerli tweeted, having purchased their property at a cheaper mortgage rate and being under less financial pressure.

For Gerli, a crash of Airbnb listings revenues was to be expected, as a slowdown of the post-pandemic travel demand followed a massive increase in Airbnb supply.

"The pandemic is over. Fewer people are working from home/vacationing in states like Montana, Texas, and Tennessee," he wrote. "So the demand is way down. Just as the Airbnb supply went way up. So you get a crash."

But, ultimately, an Airbnb crash would "help to rebalance the real estate market and provide fresh opportunity to a new batch of homebuyers and investors in 2023 and 2024," Gerli wrote in an article published on Reventure's website.

Airbnb sales would increase the number of homes for sale or rent, pushing down prices and rents and enabling aspiring homebuyers who had been squeezed out of the market to re-enter it. A drop in inventory would also eventually stabilize Airbnb, and create "fresh opportunity for aspiring Airbnb investors," Gerli said.

Lane agreed that Airbnb revenues per listing will likely continue to decline this year, though his forecast is not at all as catastrophic as that of Gerli.

"We expect modest declines throughout the rest of the year, down around 1 percent for RePAR [Revenue Per Available Room] and then no growth in 2024. Occupancies coming down slightly offsetting a small increase in average daily rates [also known as ADRs]," he told Newsweek.

But the economist added that, "with the number of listings increasing by 14 percent in 2023 and revenue per available listings down just 1.1 percent," as per AirDNA expectations, "we still see overall revenue earned by short-term rental hosts and property managers increasing by 13 percent in the U.S. in 2023."

According to AirDNA, this is the most likely scenario, while AllTheRooms and Gerli somehow got it wrong in their predictions.

"AllTheRooms' data only includes Airbnb listings, however, AirDNA covers properties listed on Airbnb and/or Vrbo (Expedia group), and we deduplicate those listings which are on both sites to give the true size of the industry," a spokesperson for the company told Newsweek. "By tracking calendar movements and leveraging machine learning models, we are able to report on the aggregate performance of each listing regardless of the source of the reservation."

AirDNA has been found by independent studies to have over 96 percent accuracy across all markets. According to the company, a problem with Gerli's tweet is that it "reflects metro areas and not cities."

"The data we used for comparison reflects the same metro definitions Nick Gerli used. We cannot comment on the data or the analysis since it wasn't put out by AllTheRooms. It's possible that there is something wrong or misleading in the analysis of the data by Nick Gerli since it is not replicable from our dataset."

Newsweek has contacted Gerli for comment by email.

Update, 6/29/23, 3:37 a.m. ET: This article and its headline have been updated with additional information, and comments from Jamie Lane contesting the AllTheRooms data.

Update, 6/29/23 10:30 a.m. ET: This article was updated to include a comment from Airbnb and AirDNA, and to amend "revenues" to "revenues per listing."