The short-term rental market was already gaining steam before the world was hit by the COVID-19 pandemic, but it really took off during a time when most other industries and markets were suffering. Those willing to travel were looking for different modes of accommodation, and staying in private quarters was appealing to those who didn’t want to stay in hotels.
Savvy real estate investors and entrepreneurs who saw that trend developing and got in early to buy a short-term rental have made a hefty profit. It’s not too late, however, to get in on the action. We took a look at what parts of the country are now crazy hot for short-term rental investments. These are the markets that have grown the fastest over the last 18 months.
(All prices and percentages quoted below come from Beyond’s database and are for average nightly stays in a 2-bedroom rental.)
Telluride began as a modest Victorian mining town that turned into one of the most famous ski destinations in the world. With high-end everything, from retail to restaurants to real estate, it’s attracted the well-off and famous for decades.
This hasn’t stopped the short-term rental market, however, from reaching new heights in 2021. The average nightly rate has increased by 45%, going from $351 to $501 a night.
Montana (Big Sky, Bozeman, Big Fork)
The Big Sky State has seen an influx of not only tourists but those seeking a new home over the last couple of years, a trend that was undoubtedly sped up because of the pandemic.
According to Bozeman Real Estate Group, having more space, outdoor recreation activities, job opportunities and overall quality of life are the main factors why folks are flocking to the state.
This new reality is reflected in the state’s short-term rental market as well. Places like Bozeman (up 34%), Big Sky (up 30%) and Big Fork (up 23%) have seen demand, and corresponding prices, surge in the last couple months.
For picturesque small towns with quirky shops to natural parks with jaw-dropping, color-changing foliage, it’s hard to beat the northern part of this New England state.
This market has seen not only an increase in prices (up 34 percent), but also an increase in occupancy, growing by 16 percent over the last year.
Northern California (Mendocino, Vallejo)
The raging forest fires not withstanding, the short-term rental markets in northern California have seen some impressive growth. Two locations that have seen the biggest boost in nightly rates are Mendocino and Vallejo.
Mendocino, known for its cliffside trails and gorgeous beaches, has seen a 27 percent increase, while Vallejo, just north of San Francisco on the Bay and home to Six Flags Discovery Kingdom, has grown by 37 percent.
If your first thought of Pittsburgh is a dirty factory town, then you haven’t been lately. Over the last several years, the city has transformed itself into a vibrant, clean, and fun place to live and work.
Yet the city’s real estate remains relatively affordable, with median home prices about 40 percent below the national average. This makes it a perfect place to seek investment properties for short-term rentals. But the deals are going fast - occupancy has increased by 23 percent and average nightly rates are up 34 percent since last year.
Ann Arbor, Michigan
Located a short drive from Detroit, Ann Arbor is best known for being the home of the University of Michigan. The university attracts brains and talent from all over the world, making the real estate market attractive for investors.
Since 2020, the short-term rental market in Ann Arbor has seen growth of 22 percent in occupancy and 28 percent in nightly rates.
Home of the recently minted NBA champions Milwaukee Bucks, this city has seen considerable growth over the past several years, and the numbers keep on growing.
According to the Milwaukee Journal Sentinel, the real estate market in 2021 has outperformed the record-breaking 2020 market for six months in a row. And we’ve seen that demand in the short-term vacation rental market as well, with nightly rates increasing 28 percent since the beginning of last year.
Interested in drilling down into your specific market to evaluate buying a short-term rental? Try Insights today. Access actionable, comprehensive short-term rental market data to inform your revenue management strategy.