In the face of global economic uncertainty, Airbnb's apartment rental program is seeing a boost in demand.
"In recent months, the real estate market has seen a surge in demand for rental properties as many people continue to delay their home-buying decisions, mainly due to decreased affordability related to mortgage interest rate increases," Drew Coleman, founder of Oregon-based Opt Real Estate, told FOX Business.
It's creating a unique opportunity for renters and hosts to take advantage of Airbnb-friendly apartments to help weather the economy, especially the housing market, according to Coleman and Jesse Stein, the Airbnb global head of real estate.
Airbnb's program launched in November 2022 to help people find apartments where they can host on Airbnb part time. Since then, it has grown modestly from 175 buildings in 25 markets to more than 250 buildings across 37 markets to address the growing interest. To date, there are more than 3,000 people across 850 cities on a waiting list to be notified about when an Airbnb-friendly apartment building is available, Stein told FOX Business.
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Stein said the program has already served a "viable economic lifeline" for hosts at a time when they are feeling squeezed by the high cost of living.
For instance, 68% of people who are already hosting an Airbnb-friendly apartment are using the extra income to offset their living expenses, according to Stein.
"Airbnb-friendly apartments is part of our broader efforts to help more people tap into the economic benefits of hosting at a time when many are trying to keep up with the rising cost of living, particularly renters," he said.
He further noted that "the more we can do to provide renters extra income to eventually buy a home, if they so choose, the better."
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Stein recalled how hard it was to save for a 20% down payment for his first home in the Bay Area about a decade ago.
He acknowledged that things are even more stressful today given that mortgage rates are astronomically higher than even a year ago.
Mortgage rates rose to 6.39% last week, up from 6.27% the week before and marking another setback for potential buyers. The housing market is already reeling from more than a year of interest-rate hikes by the Federal Reserve. The key 30-year fixed rate was 5.11% a year ago, according to Mortgage buyer Freddie Mac.
The high interest-rate environment is also forcing more homeowners to lean on temporary housing as they navigate the tricky market, according to Coleman.
For instance, there are "fewer buyers in the market due to the increased costs of housing related to higher rates, and fewer sellers in the market as many are not willing to give up their sub 4% or even sub 3% rates they locked in within the last three years or so," Coleman added.
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This lack of supply has made it increasingly difficult for contingent buyers, which are buyers who make offers subject to their current home selling, Coleman added.
As a result, "many sellers are selling their current homes and then beginning their search for their next property," he said, adding that "this leads many to need a temporary housing solution after their trailing property is closed but before their new property has closed or while they are shopping for it."
Even though Stein said the high cost of living has helped boost interest in the program, he believes that "long term this works in any cycle given it helps people generate extra income."
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Likewise, Coleman projects that demand for Airbnb-friendly apartments is only expected to increase in the coming years.
"As more people continue to opt for renting over buying, short-term rentals are likely to become an even more attractive option for many renters," he said.
