Overview

The COVID-19 pandemic created a massive surge in the short-term rental market in the United States. This was primarily due to the quarantine, which made domestic or international travel difficult and forced professionals to find short-term rentals that could provide them with the amenities lacking in traditional hotels. This led to a spike in Airbnb sales in popular urban areas such as Las Vegas, San Diego, and New York City and key tourist destinations during 2020 and 2021. 

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Today, the market is very different from the pandemic. After the travel restrictions were lifted, many Airbnb hosts found themselves in an oversaturated market. Occupancy rates dropped as social distancing was lifted and the housing market started declining with higher mortgage rates. With these changes, the former hotspots such as Austin, Boise, and Phoenix are no longer desirable Airbnb locations for potential investors. 

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Property owners who are considering Airbnb investments should refer to this blog to find the best places to purchase Airbnb properties around the nation.

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Why Talk About This

HostAI processes and handles over 5 million messages regarding short term and vacation rental properties around the globe. With the large amount of data that is collected from these interactions, we can provide reliable information that can assist in maneuvering through the short term rental markets around the nation.

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Are Airbnbs Still Profitable in 2024?

Economic Changes

The short version of the answer to the question above is, yes. The short term rental industry is still a growing market despite the difficult year that was 2023. RevPAR (revenue per available room) decreased for the first time in 2023 after the spikes in 2021 and 2022, but AirDNA’s predictions suggest that RevPAR should be starting to rise in 2024. This is primarily due to the federal government likely not raising the mortgage and interest rates higher than it already is. In fact, with the economy recovering, it is most likely that it will go down. As such, the market projections that predicted house prices going down in 2023 will likely happen in late 2024 to 2025 instead. As properties across the country become more affordable, investing in an Airbnb or a vacation rental property can become a more promising investment opportunity. 

International Events

In the next two years, the United States is projected to host both the FIFA World Cup and the Olympics. According to the statistics provided by AirDNA, the Airbnb boom in Paris for the 2024 Olympics shows that the Olympics increased the demand for Airbnbs by almost 27% with over 621K demand nights for the duration of the event (Friday, July 26th, 2024 to Sunday, August 11th, 2024).

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This statistic is especially relevant for Airbnb hosts located in highly populated urban areas that cater to tourists and business travelers. Major events such as the ones listed above can lead to a significant increase in traffic and with two of them on the horizon.

Monkey Pox

There are some speculations that the outbreak of monkeypox can lead to similar effects resulting from the Covid-19 pandemic. Many medical experts are pessimistic about monkeypox becoming the next global pandemic since the virus that causes monkeypox is more difficult to spread. Centers for Disease Control and Prevention also states that it can only be spread through the exchange of infected bodily fluids. These factors make it unlikely that another global pandemic is on the horizon, or at least Airbnb investors shouldn’t invest thinking that there is another one coming up.

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What Key Airbnb Metrics Are Used in the Analysis?

Cash on Cash Return

Cash on cash return rate should be the first immediate metric that an investor looks into when they are considering any form of real estate investment. It calculates the rental yield with respect to the home price. With house prices rising an average of 3% during 2023, the areas with the best cash on cash return rates are often neighborhoods with affordable median property prices with a reasonable rental income. 

Airbnb Listings, Average Daily Rate, and Occupancy Rates

Other important statistics to keep in mind are provided by Airbnb. Airbnb occupancy rate shows the amount of times that the short term rental properties in the neighborhood are rented out by the guests. The large volume of Airbnb listings along with high occupancy rates implies a high rental demand in the area while the market is not saturated, which makes the location in combination with a high average daily rate a promising investment opportunity. Many locations that are close to national parks, amusement parks, ski resorts, or other major tourist attractions with a rich history often show these trends. These features also ensure that there will often be steady revenue growth from these Airbnbs as well.

Regulatory Risks

In response to the Airbnb boom all across the nation, many states and counties are enforcing strict short-term rental laws to protect the lifestyles of neighborhood residents and prevent unregulated practices from disturbing public welfare. These regulations can range from demanding hosted stays, where the host must be present on the property during the guests’ stay, to certain neighborhoods requiring additional vetting and limiting the number of short term rental properties. These restrictions not only hinder the local market but also pose the risk of additional laws being passed in the future to further restrict the operations of short term rentals in the area. 

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Best Airbnb Markets in 2024

Anaheim, California

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Anaheim’s home value is inarguably the highest out on the list sitting at $868,720. This high cost is matched by an occupancy rate of 76%, largely due to the neighborhood being near Disneyland and California Adventures. The high performance of these short term rentals is also showcased by their average revenue being over $112,000.

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Winter Haven, Florida

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Florida remains the tourist capital of the nation. The high real estate prices in key tourist locations make them unattractive investment opportunities, especially with the strict regulations that are often enforced in those neighborhoods. Winter Haven is one of the rare exceptions in Florida where the neighborhood’s affordable prices along with nearby tourist attractions such as LEGOLAND Florida Resort and the nearby lakes make it a promising location for real estate investments. 

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Port Angeles, Washington

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Port Angeles is a popular tourist destination for outdoor enthusiasts due to its proximity to the Olympic National Park. As of January 2024, the city has proposed a new regulation that may regulate the number of short term rentals in residential districts, so the prospects for this city as an investment opportunity may change depending on whether or not additional restrictions are put in place. The high occupancy rate of 64% leaves Port Angeles as a great investment option.

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North Las Vegas, Nevada

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There is probably no need to explain the tourist attractions that Las Vegas features. A factor that many overlook is that Las Vegas also hosts numerous conferences throughout the year that also bring many business travelers into the city. Many of them may consider cheaper options than the traditional hotels, and this is when North Las Vegas comes in. The house prices are lower than other popular neighborhoods while being close to key areas such as the Strip and the Las Vegas Motor Speedway. Read our post on Las Vegas Airbnb Laws as they apply to North Las Vegas as well.

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Ellsworth, Maine

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Ellsworth Maine was chosen as the Best Place to Invest by AirDNA for a reason. The low home value is coupled with its closeness to Acadia National Park. Tourists can enjoy the quaint downtown while venturing into the Cadillac Mountains, where they can see the sunrise before anyone else in the United States. These features make it an ideal location for vacation rentals, which is supported by a whopping 73% occupancy rate with a daily rate of $335. 

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Conclusion

As it can be seen from the list above, the most ideal Airbnb investment locations achieve a delicate balance of affordable housing prices and a high occupancy rate. Yes, there are exceptions such as Anaheim where the high housing prices are justified by the high returns, but one also runs into the risk of investing a large amount of capital in a fast-changing, volatile industry whose trends can change at a whim. 

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