AirDNA Economist: Why 6-Bedroom Airbnbs Are Winning (Small Homes Are Dying)

Michael Sjogren (0:00)

All right, the STR Economist aficionado is back in the house. Jamie, how are you doing, sir?

Jamie Lane (0:06)

I'm good. I love that title too. I actually just bought streconomist.com and spun up a site.

Michael Sjogren (0:13)

I love it. Well, it's always a pleasure to catch up. And you're someone that sees more data than anybody in the space, especially when it comes to just overall economics of what markets are looking like.

You guys have a purview of infinite amounts of properties in the space. So what I'd love to start with, and then I know Riley's got a boatload of questions he wants to smash through for this episode. But I'd love to just take a step back first, like macro big picture, how we look in 2026 versus 2025, and then where do you think we're going to be shaping up towards the end of the year?

Jamie Lane (0:48)

Yeah. So we went into this year of thinking this, and this was going to be the year of reaccelerated supply growth, like interest rates were going to get up below 6%, home values were going to be flat, slightly declining, and it was going to be a great year for new investment for short term rentals. Like we had the big beautiful bill, we had accelerated appreciation again, like it was going to be rock and roll.

Then we had the Iran War, we had interest rates tick back up, we had gas prices reaccelerate, and 30-year fixed rate mortgage. I haven't looked today, but given where the 10-year treasuries have gone, like I assume it's not looking good in terms of the direction we've been heading. So it's and what we've seen happen in the macro economy has absolutely impacted what we've seen in the short-term rental industry.

We've seen supply not reaccelerate, but continue to decelerate in terms of growth. So last year was about 3% growth. And in August, we saw 2% growth and it's been sort of mid-twos. So it's sort of slowly decelerating. But then when you look at the vast majority of vacation middle markets, whether it's in the mountain or coastal areas, supply is essentially flat. So mountain markets, we saw growth of 0.4% this summer. Like that's nothing. Coastal markets, we're seeing 1% growth. And we did see some accelerated growth in urban markets, but that was all World Cup. So it was Atlanta, Houston, Dallas, Kansas City, New Jersey, and some growth out on the West Coast. So this has not been a great year for new investment in terms of adding more supply, but that has actually had a downstream benefit for existing operators.

You've got less new competition coming in to compete with you.

And we've seen overall occupancy levels hold up relatively well. We're flat, slightly increasing overall occupancy nationally. And that has finally given some pricing power back to hosts. And whether it's a combination with overall prices going up, inflation has been taking up this year, but we're seeing an overall ADR growth up 3.5%, 4% this summer. And that has been a welcome, I think, surprise or benefit to a lot of hosts where selling more rooms is great. But there's a lot of work with selling more rooms. If you just can get a higher price for what you're already selling, that usually goes straight to the bottom line. And that is great for a lot of these businesses where you've got fixed debt and your mortgage expenses isn't changing year after year. But if you can start selling what you have for more, and that's going to really help your business.

Mike Reilly (3:36)

Yeah, 100%. We're seeing the same thing too.

Rates are way better, I mean, like 10%, 15%, 20% better in all of our markets in North Carolina. And occupancy is still pretty strong. It's pretty flat compared to last year, but rates are just way better. So when I originally looked at the forecast for 2026, you guys are projecting like 4% or 5% supply growth. And it's really just been straight flat because of the things that we talked about too. I'm curious. I couldn't ask this earlier this year when we had you on the podcast, because we didn't have enough data yet. But when the big beautiful bill came out last year, and we were able to do 100% bonus depreciation, that came back. Did you see any uptick in investments in supply at the end of last year, comparatively to previous years? I feel like there's going to be another uptick this year, but I wanted to ask you what the data looked like.

Jamie Lane (4:26)

Yeah. When you look at year over year growth in supply, it did take up a little bit at the end of the year. I wouldn't say a lot. Then it did spill over into January, February, but then once the Iran War started and interest rates really ticked back up, that's when supply growth just collapsed again. I think we did see in coastal markets, and the coastal mountain markets, those are ones that are really interest rate sensitive. At the end of last year, November, December, we're seeing 4-5 percent growth. That continued through into January, and then March, we're back down to 2 percent.