5 Short Term Rental Market Trends to Watch Out For in 2022

As people feel more open about traveling, we take a look at the short term rental market trends that real estate investors should watch out for in 2022.

There is no doubt that short term rentals play a significant role in the travel industry. Before the pandemic started, experts predicted the short term rental market to reach $115 billion in size. Of course, the forecasts and predictions did not foresee COVID-19 disrupting everything, especially travel.

But after two years, Americans, as well as the rest of the world, are ready for things to go back to normal. In the US, more individuals are getting vaccinated, cities and states are easing restrictions, and the Biden administration reopened the country’s borders to foreign tourists. So how will short term rentals perform in 2022?

In this article, we will analyze which direction the short term rental market will take this year. To do that, we will first look at the trends and sentiments on travel according to both Americans and foreigners. Then, we will list the top five markets for short term rental investment. We will also analyze expert predictions for the real estate market in 2022 to see how it may affect investors who are planning to buy a new short-term rental property.

US Travel Trends and Sentiments

According to the latest report from Destination Analysts, the overall American travel sentiment has already recovered since the COVID-19 Omicron variant disrupted the industry.

• 41.9% of Americans are feeling optimistic about the course of the pandemic over the next month;
• 81.5% are in a ready-to-travel state of mind, among the highest levels since the pandemic started;
• Almost 77% are excited to travel in the next 12 months and are expressing a greater likelihood to attend large gatherings like conventions in the near future;
• 92% anticipate taking around three leisure trips this year, the highest reported figure in 14 months; and,
• The number of people who think it is safe to go on a ski and snowboarding trip doubled from last season.

As more Americans are starting to have a positive mindset towards travel, they are also starting to make plans.

• Nearly two-thirds say that they are highly excited about traveling with their families;
• Over 70% are prioritizing spending time with their loved ones, though more travelers are looking forward to having fun and relaxing;
• Food, visiting historical attractions, and shopping are some of the top activities they want to do; and,
• New York, Florida, Las Vegas, and California are the top destinations for 2022.

Meanwhile, for foreign travelers, interest in international travel is rising in some countries while remaining stagnant in others. In 2021, North America saw a 17% increase in international tourist arrivals compared to the previous year. Because of easing mobility restrictions and rising vaccination rates and traveler confidence in many countries, the US will welcome even more business and leisure travelers this year.

With the recovery of travel demand, how will the short term rental market perform this year?

5 Short Term Rental Market Trends in 2022

At the end of last year, Airbnb released a report on travel and living. They found that the societal effects of the COVID-19 pandemic have blurred the lines between travel and living. Instead of going on trips during the weekend or holidays, people have been traveling anytime. And instead of visiting the same places they used to frequent, they are going to destinations they have never been to.

Also, because many companies continue to adopt a remote working arrangement, these workers book a short-term rental home for at least one month and work from there.

The above findings were based on data from Airbnb before the Omicron variant surge, which temporarily disrupted travel. But now that Americans and the rest of the world are worrying less about COVID-19 and feeling more confident about traveling once again, what can we expect about the real estate market this year?

#1: More People Are Booking Short-Term Rentals in Natural Settings

Before the pandemic, 13% of bookings were in mountainous regions, 34% were in coastal areas, and 10% were in rural places. But in the summer of 2021, bookings in the said areas increased to 18%, 42%, and 22%, respectively. According to Mashvisor’s analytics, as of mid-January of this year, the top-performing short term rental markets were in these areas. You can find a list of these markets in the next section.

Related: 100 Best Short Term Rental Markets in 2022

#2: Airbnb Demand Is Shifting Away From the Big Cities to Smaller Short Term Rental Markets

According to Airbnb, the most common type of travel, especially in the summer, had been one or two people visiting a big city. Last year, however, families from the big cities traveled to smaller destinations. This preference for minor destinations is bound to continue as Mashvisor’s top-performing markets are small towns, villages, and unincorporated communities.

#3: More Travelers Want to See the Great Outdoors

In Airbnb’s travel and living report, the most popular summer destinations last year also served as access points to natural features. This trend is confirmed by Mashvisor: the most profitable markets for short-term rentals are all in proximity to national parks and other outdoor destinations.

#4: Travelers Are Booking Longer Stays

The Airbnb platform saw trips lengthening overall, with bookings that go for 28 days or longer making up a growing share. The average number of nights per booking extended from 3.5 in 2019 to more than 4 in 2021. It is expected to continue in 2022 as companies allow their employees to work from anywhere. Those who have been living nomadically but had to stay in one place during the pandemic will return to their lifestyle if they have not done so already.

#5: Big Cities Are Welcoming Travelers Who Are Staying for Longer

It is no secret that many of the biggest cities in the US are also some of the most expensive places to live in, with their sky-high property prices and rent. Even though fewer people than before are booking Airbnbs in urban areas, the ones who tend to have the flexibility to travel and live anywhere. Thus, they have been booking a short-term rental for 28 days or longer in big cities like New York, Seattle, and Los Angeles.

Investors adopting a short term rental strategy in big cities can maximize their profit by optimizing their property to accommodate these types of travelers. It means fully equipping the kitchen or making the space pet-friendly.

5 Best Short Term Rental Markets 2022

Based on the five short term rental market trends we mentioned in the previous section, what are the best Airbnb rental markets to invest in this year? Here is a list of the five top rental markets for Airbnb based on Mashvisor’s short-term rental market analysis.

#1: Winslow, AZ

• Airbnb Rental Income: $2,134
• Airbnb Cash on Cash Return: 9.97%
• Airbnb Daily Rate: $111
• Airbnb Occupancy Rate: 54%
• Median Property Price: $204,250
• Average Price per Square Foot: $129
• Days on Market: 94
• Walk Score: 55
• Notable Attractions: Grand Canyon, Petrified Forest, and Homolovi Ruins State Park

#2: Milan, IL

• Airbnb Rental Income: $1,732
• Airbnb Cash on Cash Return: 9.63%
• Airbnb Daily Rate: $87
• Airbnb Occupancy Rate: 66%
• Median Property Price: $113,838
• Average Price per Square Foot: $97
• Days on Market: 75
• Walk Score: 50
• Notable Attractions: The Hennepin Canal State Trail and MPI Arts & Crafts Fair held every 1st Sunday of May and October

#3: Huntingdon Valley, PA

• Airbnb Rental Income: $9,740
• Airbnb Cash on Cash Return: 9.61%
• Airbnb Daily Rate: $299
• Airbnb Occupancy Rate: 65%
• Median Property Price: $428,580
• Average Price per Square Foot: $223
• Days on Market: 67
• Walk Score: 5
• Notable Attractions: June Fete Village Fair (held every second weekend after Memorial Day), Rose Bridge Farm & Sanctuary, PHS Meadowbrook Farm

#4: Salem, AL

• Airbnb Rental Income: $4,901
• Airbnb Cash on Cash Return: 9.56%
• Airbnb Daily Rate: $212
• Airbnb Occupancy Rate: 56%
• Median Property Price: $364,933
• Average Price per Square Foot: $151
• Days on Market: 61
• Walk Score: 6
• Notable Attractions: Phenix City Motocross, Lake Harding, Angel’s Antiques & Flea Mall

#5: Westover, WV

• Airbnb Rental Income: $2,792
• Airbnb Cash on Cash Return: 9.35%
• Airbnb Daily Rate: $133
• Airbnb Occupancy Rate: 60%
• Median Property Price: $182,580
• Average Price per Square Foot: $146
• Days on Market: 90
• Walk Score: 24
• Notable Attractions: Downtown district, West Virginia University – Downtown Campus and Evansdale Campus, Prickett’s Fort State Park

Disclaimer: When creating this list, we only selected the short term rental markets that allow non-owner-occupied Airbnbs. However, we encourage you to contact the appropriate local government and HOA to verify their regulations for short-term rentals.

We based the top short term rental markets on cash on cash returns. This metric is important because it calculates your potential cash returns on the cash you spent toward the property (i.e., full payment when buying or mortgage payments).

To start looking for and analyzing the best investment properties in the markets mentioned above or in other areas of your choice, click here.

Related: What is a Good Cash on Cash Return?

2022 Housing Market Trends and Forecast

The short term rental market trends mentioned in this blog post are likely to be more beneficial to investors who already have Airbnb properties. If this will be your first time investing in a short-term rental, is it still possible to cash in? Or are you already too late? To answer this question, we need to look at the trends and predictions for the housing market in 2022 and confirm them with Mashvisor’s real estate market analysis.

Mortgage Rates Are Increasing But Will Stay at an Average of 3.50%

In 2021, the 30-year fixed mortgage rate averaged at a historically low 2.96%. But as the economy reopens and inflation rises, these rates are bound to rise. In the last week of January, the average 30-year fixed mortgage rate was 3.55%, falling slowly after a month-long increase. Experts said that this movement followed the slight increase in the 10-year Treasury yield.

Even though the Federal Reserve has announced plans to gradually ease off its supportive monetary policy, some experts predict that the mortgage rates will average 3.50%. This is a half-point lower than what was forecasted last year, which projected the rates to reach an average of 4.00%.

While these rates are at least one point higher than last year, investors who wish to buy a new property will still be able to get solid cash on cash returns. Just make sure that you have good financial health so you can get the lowest possible interest rates. Also, analyzing the potential profitability of the property before you commit to buying it will help. To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.

Home Sales Will Continue to Rise to a 16-Year High

By the end of 2021, home sales across the US fell 3.6% month over month and 10.7% year over year. Aside from the winter months being a slow period for home sales, experts also say that the record-low housing inventory also contributed to the decline.

This year, even though home prices and mortgage rates increase will reduce buyer demand, the number of home sales will still inch up by about 1% this year. This is because new inventory is expected to come from three sources:

1. New construction of single-family homes
2. Homeowners who delayed selling their houses and are ready to move by spring
3. Distressed sales

As of January, Mashvisor’s analysis of the top 5 short term rental markets shows that the average home in these towns spends around 77 days on the market before selling. Because these are smaller areas, they may not have a lot of new home constructions, but you may find new listings from new sellers and distressed sales.

Related: How to Buy Distressed Property in 8 Steps

Keep Tabs on the US Short Term Rental Market with Mashvisor

2022 is an exciting year for property investors who currently own or are planning to buy a short-term rental home. Airbnb properties that are in natural settings will get more bookings from big groups, while those in the urban areas will host remote workers who will stay there for at least a week. Even though buying a new house would be more expensive now, you will still enjoy high returns as demand for travel bounces back.

But just like most trends, these short term rental market trends may change depending on multiple factors that we do not have control over. So, instead of waiting for experts to dictate what’s hot and what’s not, you can rely on your own analysis of top rental markets 2022 with the help of Mashvisor. Our platform has been helping real estate investors find lucrative Airbnb properties in the US with just a few clicks.

To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.