Short Term Rental market's wild ride 🎢

Hello, happy Thursday! Brett here to serve your daily dose of real estate. Today, we're diving into a mixed bag:

• U.S. STR Market Review: A record-breaking year for short term rentals, but watch out for those occupancy dips!

• 5G's Real Estate Revolution: Discover how REITs are tapping into the goldmine of 5G technology.

• 🔥 Deal of the Day! 🔥: 4 bd | 3 ba | Livingston, TN

The 2023 Rollercoaster Ride of STRs

Let’s dive into the fascinating world of U.S. short-term rentals (STRs) for 2023 and forecasting the trends for 2024. Hold on to your hats, because this ride through data and metrics is going to be a wild one!

Last year was nothing short of a rollercoaster in the STR market. Picture this: July was off the charts with nearly 24 million nights booked. September saw a record-breaking 1.64 million listings available. And the cherry on top? A whopping $64 billion in annual revenue!

But it wasn't all sunshine and rainbows. The specter of high inflation and a feared recession (which, spoiler alert, didn’t happen) put a dent in our occupancy rates, especially at the start of the year. We dipped below those pre-pandemic levels due to an overcorrection in supply. However, by the year's end, the economy was looking up, keeping the recession at bay and maintaining low unemployment levels. So, we marched into 2024 on solid economic ground.

Let’s talk numbers for December 2023:

• RevPAR fell by 8.1% to $155.37.

• Available listings hit 1.61 million, a 14.3% increase.

• Total demand climbed by 4.3%.

• Occupancy was down 5.8% at 49.9%.

• Average daily rates (ADRs) dropped by 2.4% to $311.09.

• Nights booked? Up by 11.5%.

The job market stayed robust, adding 216,000 jobs in December alone. With employment looking good, people started planning trips for 2024, as bookings in December grew by 11.5% year-over-year.

Economic indicators are crucial for hosts and investors. Inflation ticked up slightly in December, but core inflation (excluding food and energy) slowed down. The Federal Reserve is hinting at relaxing monetary policy, which could lower interest rates. Mortgage rates responded, falling from 7.8% in October to 6.6% by December's end. Housing market forecasts suggest stable or slightly declining home prices, potentially boosting housing transactions in 2024. This could mean more opportunities in the STR market.

Reflecting on 2023, supply outpaced demand, causing a 5.4% drop in occupancy compared to 2022. However, the market self-corrected, aligning occupancy with 2019 levels by September. Hosts optimized their listings, and an interesting trend emerged: the extended summer season, stretching into September and October. Factors like heatwaves, housing market conditions, and inflation might be reshaping travel habits.

December, however, saw a slowdown in demand growth to 4.3%. Hosts anticipated this, adjusting their supply accordingly. This savvy move kept occupancy in line with December 2019 levels. Despite a dip in ADRs, the market remained balanced in terms of supply and demand.

A notable trend in large urban areas, especially New York, was the regulatory impact on STRs. With New York's stringent regulations, demand plummeted by 46.1%. Conversely, nearby Jersey City/Newark soared with a 53.7% increase in demand, benefiting from New York's loss.

Looking ahead, early 2024 bookings are promising, with demand in January already up by 8% from 2022. Bookings are expected to surge between 13% and 21% through June. Spring break and the North American eclipse on April 8 will be key events influencing demand, with bookings for rural locations on the day of the eclipse skyrocketing by 225.5%. (source)

5G: The New Frontier for REIT Investors

Let’s talk about a game-changing insight into the world of Real Estate Investment Trusts (REITs) and how they're intersecting with one of the hottest trends in tech: 5G. We're not just talking about properties and rent checks anymore. This is about riding the wave of technological revolution, and it's a story you won't want to miss.

So, here's the scoop. There's a unique breed of REITs that's been quietly positioning itself to capitalize on the 5G boom. Think about it: 5G isn't just about faster smartphones. It's the backbone of an emerging digital infrastructure, powering everything from self-driving cars to smart cities. And where does real estate come into play? Well, 5G requires a physical network of cell towers, data centers, and fiber optic cables – and that's real estate gold.

These specialized REITs are the unsung heroes behind the 5G curtain. They own and operate the essential infrastructure that makes 5G possible. We're talking about a market that's set to explode as 5G rolls out across the globe. It's not just about coverage; it's about density. More devices, more data, and more connectivity mean a greater need for the physical infrastructure that these REITs provide.

But here's what really makes this a tantalizing opportunity: stability and growth potential. Unlike traditional REITs that rely on rent from tenants, these tech-focused REITs benefit from long-term leases with major telecom operators. We're talking about stable, predictable cash flows – music to an investor's ears.

Moreover, the demand for 5G infrastructure is only going to skyrocket. As industries and cities become more connected, the need for data centers, cell towers, and fiber networks will keep climbing. This means these REITs aren't just a short-term play; they're positioned for sustained growth.

However, it's not all sunshine and rainbows. Investing in these REITs requires a nuanced understanding of both real estate and technology sectors. It's a hybrid that straddles two rapidly evolving worlds, and that can bring its own set of challenges and risks.

So, what's the verdict for savvy investors like us? It's time to look beyond traditional real estate investments and consider the potential of 5G infrastructure REITs. They offer a unique combination of technological innovation and real estate stability, setting the stage for what could be a rewarding investment journey. (source)

🔥 Deal of the Day! 🔥

Address: 200 Duke Ln, Livingston, TN 38570

Located about 150 miles northwest of Gatlinburg, in the serene and scenic Livingston area, this property promises a tranquil getaway with its spacious design, modern amenities, and proximity to natural attractions, making it an ideal vacation rental for those seeking both relaxation and adventure..

Airdna data:

Estimated monthly payment: $2,810/month (if financed)

Estimated monthly revenue: $1,916/month

Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.

That's your dose of Keys for today – keep unlocking those real estate secrets, and see you tomorrow for more insights and trends!