Home Prices May Be Falling, But Are They Affordable?

06.12.2023 - 04:31 / skift.com / Srividya Kalyanaraman

San Bernardino County in California is conducting a comprehensive study to evaluate the impact of how short-term rentals affects housing availability in the county. 

San Bernardino is home to Big Bear Lake, one of the top vacation rental destinations in the state. A recent Southern California News Group analysis revealed that only 29 out of California’s 538 cities and towns meet the state’s affordable housing requirements, underscoring the need to address housing concerns within the county. The county introduced measures, including a temporary 45-day pause on new approvals for short-term rentals. It also imposed restrictions in desert and mountain communities, such as limiting new permits to two per individual and implementing occupancy limits of up to 12 guests based on dwelling size. And penalties are 10 times higher in San Bernardino than they were in 2021.

It’s interesting to note what is happening in the short-term rental and housing markets in Big Bear. We’ve been over this. An increase in active listings compared to occupancy levels puts pressure on revenue per available night. 

Average Revenue Per Available Night and Average Active Listings in Big Bear, 9/2021 to 6/2024

Average Monthly Revenue for Short-Term Rentals in Big Bear, California

Meanwhile, the median home sale price has fallen, fewer homes were sold compared to last year and they remain on the market longer. 

Does this imply that the short-term rental market and real estate mimic one another? Perhaps, but that would be an overestimation and most importantly, an oversimplification. Not all supply is the same — and professionally managed properties seem to do just fine. But many individual hosts who entered the market during the Covid boom are exiting the market. 

As regulation calls for higher taxes and penalties, it simply has become unfeasible for a lot of self-managed properties to keep bringing in the revenue they did two years ago. And these home sales are a prime opportunity for investors to lap them up and keep them as rentals.

As Paul Kromidas, CEO and co-founder of STR operator Summer told Skift, those who were “touring” the industry — trying their hand at owning and operating short-term rentals — will slowly leave the market, putting those homes up for sale. And it’s anybody’s guess as to who can afford to buy.

The U.S. housing market is seeing mortgage rates rising by more than 22% from this time last year, and according to Zillow, the average house price in America is up 1.2% to $348,853, with pressure mounting on those who bought properties to rent.

How this all affects housing affordability is the answer we await. But it’s very likely that investors still get the first pick of homes on the market. 

While Big Bear