As travel has been significantly minimized and less people are renting out Airbnb‘s, it leaves vacation rental owners in a bind, with some paying multiple mortgages.
While Airbnb has mended some of its policies to accommodate the extenuating circumstances, are vacation homeowners protected with mortgage forbearance?
Airbnb, which recently cut about 25% of its workforce due to COVID-19, has not spoken out on assistance for these homeowners. However, GSEs like Freddie Mac say that “While the Guide currently provides that only Mortgages secured by Primary Residences are eligible for a forbearance plan, until further notice the Mortgaged Premises may be a Primary Residence, second home or Investment Property.”
In an interview with the TODAY Show, Airbnb CEO Brian Chesky said that cleanliness is the company’s top priority when renting out homes.
“I think travel is going to shift,” Chesky said in the interview. “It’s going to be smaller, it’s going to be more intimate, it’s going to be smaller towns, it’s going to be smaller communities. More intimate, more local.”
“This is a storm,” Chesky continued. “But like all storms it will end. We will be ready when travel is back, hopefully this summer.”
In an interview with HousingWire, realtor.com’s Senior Economist George Ratiu said that while it’s hard to predict how the pandemic will play out, he doesn’t see travel traffic rebounding for the next three to five months.
“I think that for many owners, particularly those who have multiple properties, the road to recovery will be challenging,” Ratiu said. “Especially so because for most owners of multiple properties, they have financing so they have to meet mortgage obligations. These are investment properties. For many of them, the ability to leverage the option of selling them in the current environment is less desirable.”
How will those vacation rental homeowners recover from the fall of vacation travel? With spring break and some summer vacations cancelled, what’s next?
In a report from realtor.com, it says that some short-term rental owners are pivoting to renting out the properties long-term instead.
The report said that tourist destinations are actually seeing a significant increase in furnished seasonal rentals, with hosts locking in tenants for monthly or seasonal rentals.
Just since the end of February, realtor.com said that these Airbnb and Vrbo hubs saw an average increase of 74% in seasonal rentals.
Ratiu said that it will be the markets that are popular tourist destinations that will come out on top.
“Obviously, vacation hotspots are those that are likely to see the rebound,” Ratiu said. “I think here, most places near the beach, places near the mountains, it makes it easy for people to vacation while still maintaining a certain degree of social distancing.”
According to a survey from AirDNA, the average length of stay at Airbnb properties nearly doubled, from 3.76 days prior to March 10 to 6.4 days March 10 through March 18.
Bookings made on Airbnb in April are down 70% from 2019, the report said. There were 4.7 million bookings made in April 2020 vs 15.7 million bookings made in April 2019.
Meanwhile, 45% of hosts won’t be able to sustain operating costs if the pandemic lasts another six months, as 16% have already missed or delayed a mortgage payment on one or more of their properties. On average, hosts have lost $4,036 since Covid-19 began to spread in the US, a survey from IPX 1031 said.
“I think this summer will look a little bit different than the average summer, mostly because I think people will remain cautious,” Ratiu said. “Conversely, I am a little bit bullish on the summer travel outlook for a simple reason. As humans, we generally crave mobility and we crave social connection.”
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