How could the new administration’s policies affect your short-term rental business? AirDNA’s Chief Economist, Jaime Lane, and Director of Economics and Forecasting, Bram Gallagher, explore the evolving economic landscape and implications of the new administration for the U.S. STR market.
You’ll learn:
The impact of new leadership & congress on the economy and housing market
Key policy changes and effects on the domestic travel market
New forecasts for vacation rentals in 2025
Analyzing Economic Risks and Opportunities 2:24
The new administration may boost economic growth through fiscal stimulus in 2025-2026. However, risks include a decline in international travel and challenges in the immigrant labor force, leading to higher operational costs.
Interest Rates and their influence on the market 4:17
Interest rates, influenced by inflation, impact both short-term and long-term markets. Although inflation is decreasing, new policies could affect rates. The administration may aim to reduce federal expenses by lowering interest rates.
Tariffs and Economic Forecasting 6:05
Tariff proposals are seen as negotiation tools. The forecast assumes moderate tariff increases and tax cuts from 2017, predicting a strong 2025-2026 economy.
Historical Trends in Travel During Administration Changes 7:56
Travel trends have remained strong under different administrations. Federal deregulation is possible, but most significant changes occur locally. The U.S. economy is expected to outperform others, driven by productivity.
Economic Outlook and Productivity Growth 9:53
The outlook is mixed, with challenges from rising interest rates, but GDP growth is expected due to fiscal spending. Immigration restrictions could reduce labor supply, tightening the market.
Labor Market Dynamics and Immigration Policies 13:27
Increased spending may fuel growth but tighten the labor market. Immigration restrictions could worsen labor shortages, especially in industries reliant on immigrant workers, raising costs.
Housing Market Trends and Inflation Effects 17:15
Inflation and interest rates impact housing, with prices expected to rise due to tight supply, especially in high-demand areas. The housing market remains challenging with home prices rising, though supply growth slows.
Shift to International Travel Discussion 22:19
The strong U.S. dollar has slowed foreign visits, especially to major cities. Smaller and coastal cities have been less affected. High home prices and interest rates have reduced new investments in short-term rentals.
Investment Challenges in Current Market 34:15
The market is challenging due to high prices, interest rates, and decreased revenue. While supply growth slows, fiscal stimulus in 2025-2026 could boost demand and RevPAR.
Occupancy Trends and Future Projections 37:58
Occupancy is recovering after the pandemic peaks, with a gradual return to pre-pandemic levels. The ADR is rising as the market stabilizes, with a forecast for continued growth.
Market Trends and Growth Phases 41:18
The market is shifting towards growth, with more luxury and larger listings. ADR is rising, and RevPAR is expected to grow. Larger homes are in demand for group travel, while the luxury market is expanding.
Shifts in Property Preferences 43:23
There is growth in large listings, especially in the luxury one-bedroom segment, reflecting the desire for privacy. The industry is adapting to changing consumer preferences, with a positive outlook.
Future Outlook for Travel and Supply Risks 44:41
The travel outlook for 2025 is positive, though regional differences exist. West Coast cities are recovering slowly, while Southern and Eastern regions are seeing growth. Monitoring supply risks is key.
Impact of Regulation on Short-Term Rental Supply 51:06
Regulations have reduced supply in major cities like New York and Barcelona, shifting investment to secondary markets. Rental arbitrage faces challenges but remains viable with adaptation to new regulations.
Exploring the Rental Arbitrage Market 53:54
Rental arbitrage growth has slowed, especially in urban areas, due to rising rental costs. However, new opportunities exist as vacancy rates increase, and building owners may be more open to collaborations with arbitrage operators.