The Coronavirus has had an impact on Airbnb real estate investing in the United States, and one of the most affected cities is Seattle, WA. Let’s explore the effect of COVID-19 on Airbnb Seattle 2020.
At the time of this writing, the novel coronavirus outbreak in the US has grown to at least 2,174 cases in 49 states, the District of Columbia, and Puerto Rico according to Johns Hopkins University. Last week, with over 120,000 reported cases worldwide, The World Health Organization labeled the coronavirus outbreak (COVID-19) a pandemic. This caused international stock markets to witness the biggest plunge since 2008, entire cities and countries to be placed on lockdown, and massive international events to be called off. As one can expect, this is also set to have an impact on the US real estate market 2020. To learn more about this, read: The Impact of the Coronavirus on the US Real Estate Market.
However, standing at the epicenter of the coronavirus is the travel industry. So, when talking about the impact of COVID-19 on real estate investments, we’re talking about both the traditional rental market as well as the short-term rental market. The general public has been warned against traveling in these times and president Trump has placed a 30-day ban on all travel from Europe to the US. Naturally, this is going to affect many Airbnb hosts and real estate investors. This is especially true for those investing in Airbnb Seattle as the coronavirus has generally hit Washington State the hardest and specifically the City of Seattle.
Do you own an Airbnb investment property in the Emerald City? If yes, then keep reading to understand the coronavirus global impact on the Airbnb market in general and Airbnb in Seattle according to Airbnb data and analytics provided by Mashvisor.
The Coronavirus Global Impact on Airbnb
With travel suddenly stopping in many places around the world to limit the spread of COVID-19, problems facing Airbnb and other online travel sites (like Booking.com and VRBO) have quickly escalated. The month of March is usually one of the busiest travel seasons of the year as families travel during their spring break. However, cancellations are at an all-time high, which is putting stress on not only the hotel industry but the short-term rental industry as well.
New data shows that Airbnb bookings are tanking in major cities in the United States and worldwide amid the coronavirus pandemic. This is definitely affecting Airbnb occupancy rates, and Mashvisor’s Airbnb data and analytics support this. Our Airbnb analytics come straight from Airbnb and reflect the performance of actual Airbnb listings over the past 12 months. According to our data, the nationwide Airbnb occupancy rate fell from (54.2%) from September – November 2019 to (48.9%) from December 2019 – February 2020.
Moreover, it’s common for Airbnb hosts to lower their daily rates in times of crisis and uncertainty. This is typical of a dynamic Airbnb pricing strategy. However, those who run short-term rental properties may not have the resources that larger hotels do to cover costs during this time. Instead, they rely on their Airbnb income to cover costs like their mortgage payments, maintenance, etc. Hence, Airbnb Seattle hosts and hosts in other markets are dealing with a decline in revenue as more travelers are canceling their stays. Our Airbnb data shows that while the nationwide daily rate remained the same at ($165), monthly Airbnb rental income fell from ($2,614) to ($2,571) during the same time period mentioned earlier.
The Coronavirus Impact on Airbnb Seattle 2020
While the coronavirus first emerged in Wuhan, its effects on the short-term rental market are best seen in highly-traveled cities. Data shows that after the onset of COVID-19, future demand for Airbnb in Seattle, Washington has retracted. The effect on the Airbnb rental property business in the Seattle housing market has not only been immediate but also very negative. As a real estate investment software company, Mashvisor pulled data regarding the performance of Airbnb Seattle today compared to this time last year. Just take a look at the Airbnb data and numbers below to see exactly how big the coronavirus impact has been for Seattle real estate:
- Airbnb Occupancy Rate: 74.28%
- Airbnb Daily Rate: $130
- Airbnb Rental Income: $2,885
- Airbnb Occupancy Rate: 54.01%
- Airbnb Daily Rate: $133
- Airbnb Rental Income: $2,246
As you can see from our Airbnb investment analysis in the Seattle real estate market, the Airbnb occupancy rate for short-term rentals in the Emerald City had a major drop from a whopping 74.4% in March of 2019 to just 54.0% in March 2020. This marks a year-over-year decrease of 20.4%. Of course, this drop is only natural as more and more travelers and Airbnb guests have canceled their previous bookings to Seattle (as well as other major global cities). This could be because they are simply afraid to move, in an effort to stop the further spread of COVID-19, or due to the numerous travel bans.
Mashvisor’s data regarding the daily rate set by Airbnb Seattle hosts shows that it has remained relatively unchanged between March 2019 and March 2020. Nonetheless, an argument can be made that without the coronavirus global impact on real estate, Seattle Airbnb hosts would have enjoyed an increase in the daily rate due to the growth of the short-term rental market in the city. And finally, in terms of monthly Airbnb income, our Airbnb analytics show that it dropped by almost 22% in the Seattle real estate market between March 2019 and March 2020. Due to the major drop in occupancy rates for Seattle Airbnb rental properties, this consequence doesn’t come as a surprise.
Our Advice for Airbnb Seattle Real Estate Investors
If you plan to keep investing in the Seattle housing market 2020, we advise turning your Airbnb Seattle investment property into a traditional, long-term rental. Landlords are likely to enjoy more stable cash flow than Airbnb hosts who are more sensitive to declines in demand. For years, this type of real estate property investment has provided a consistent, predictable, and passive rental income, which is why it’s seen as a safer option than Airbnb investments in times of turmoil.
Investing in traditional rentals is also safer than investing in the stock market, which can plunge during times of crisis like what we’re facing today with the coronavirus global impact. Moreover, the return on investment (ROI) from long-term rental properties doesn’t only come in the form of rental yield, but also any capital appreciation over time. So if you’re investing in a good location like the Seattle housing market and don’t want to face negative Airbnb income due to guests canceling their visits, converting your Airbnb rental property into a traditional rental is the best you can do right now.
The Bottom Line
The uncertainty surrounding the spread of COVID-19 and the coronavirus global impact on the economy is unlikely to be resolved any time soon. Nonetheless, it’s critical for real estate investors to keep in mind that the relationship between the coronavirus and the short-term rental industry is highly dynamic and evolving by the hour. These effects of COVID-19 on Airbnb Seattle, WA reflect just a few weeks of actual cases in the city. At Mashvisor, we will continue to watch all major US housing markets and report the latest developments on our real estate investment blog.
So to stay updated on real estate news around the US, sign up now to Mashvisor.