The AirBnB Bubble *JUST* BURST | Housing Collapse.

now I want to touch on a real estate and

a thread up by Nick over the channel

reventure Consulting usually I am

concerned that Nick is sometimes

heavily bearish on real estate uh

sometimes potentially a little too much

so however a threat that Nick put

together here I think has deserves

fantastic credit because it's exactly

what I've been seeing on the ground in

real estate it's been something that

I've been struggling to determine the

end result for and while Nick doesn't

have the end result it gives more

Credence to these fears that I've had

about coming problems in the real estate

market uh and this isn't to argue that

oh there's definitely going to be a

massive real estate crash but it is to

argue that if you're looking at

investment property this is something

you've really got to be careful of so

take a look at this and lots of

commentary

so what do we have and Nick mentions the

Airbnb collapse is real revenues are

down nearly 50 in cities like Phoenix

and Austin watch out for a wave of force

selling from Airbnb owners later this

year and areas hit hardest by the

revenue collapse and so we list uh via

data collected from all the rooms which

is basically a data analytics website

for uh airbnbs kind of like an air DNA

it's a little expensive if you want to

get the four year history but anyway

uh this is a service that uh you know

Nick has broken down the uh Revenue

drops that you're seeing year over year

in some of these different markets and

you can see these are all very uh

popular Airbnb markets whether it's

Orlando Myrtle Beach San Antonio Texas

Nashville Tennessee and uh before we

keep going on the stride I'd like to

interject what I've been finding

and what I've been talking about since

the beginning of the year I've been

talking about this fear that I'm seeing

rentals stagnate and not only am I

seeing rentals stagnate but I'm seeing

people who are coming into the rental

market almost panic and they're cutting

rental rates very quickly and this is

great from a deflation point of view

it's actually what's reiterated my

desire to just be all in on equities

right now because I think there's a

rental reset that's occurring

Airbnb is feeling the same thing when

you do a fundamental analysis on Airbnb

what you find is they're trying whatever

they can to get more Supply even if that

means opening up airbnbs in Partnerships

with apartment building landlords just

to get more Supply in because they need

the numbers to go up and if revenues are

falling then the only way Airbnb can

pump their numbers when revenues are

falling to show growth is by having more

rooms rented

but the problem is

Airbnb consistently suffers from a

quality standard issue and the more you

increase supply for airbnbs the more you

lower the rental value of those airbnbs

the more desirable it makes it to

actually just go into a Hilton or a

Holiday Inn where you're going to get a

consistent experience and consistent

quality this in my opinion will

reiterate this Loop of falling revenues

for airbnbs because once you lower the

price of an Airbnb

to to uh or once you start chasing

hotels and and you start introducing

more lower quality airbnbs to try to

prop overall revenues for Airbnb what

you end up stuck with is people who are

like okay well would I rather rent a

one-bedroom apartment or just go stay in

a hotel for you know a hundred bucks a

night or whatever it is so

now the question is what happens to real

estate well when rental levels compress

from a high level overview and then

we'll get specific on it but what rental

levels compress what happens is your

return on investment goes down for Real

Estate this makes a lot of sense if

somebody's going to buy a home right now

with 25 percent down

and rents or compressing the odds are

you're going to be not only negative

cash flow because uh interest rates are

so high

but if rents are falling you actually

have the downside risk of your negative

cash flow increasing even further

this is a problem and it basically leads

to less people wanting to invest in

airbnbs or single-family real estate in

fact it potentially creates the opposite

and this is something that I've been

waiting for and it hasn't happened yet

but the red flags are coming

they've been the red flags have existed

for over a year now

but the red flags are really starting to

compound that as we start seeing these

rental rates come down there's a high

likelihood that running airbnbs becomes

unprofitable that being a landlord in

this environment becomes unprofitable

unless you do it and conduct it in a

certain way wedge deals and otherwise

and there's a chance you end up seeing

investor liquidations of these

properties and this is a thesis that

Nick has as well and I'll give my

opinion on how severe I think that'll be

but first take a look at this

Nick says what's scary for the U.S

housing market is just how many airbnbs

there are data from all the rooms show

that there are when you add up airbnbs

and vrbos about 1 million vacation

rentals compared to 550

000 homes for sale this is a little

higher now uh by some accounts we're

probably closer to about 700 000 with

some of the latest data and this usually

Rises at this this time of year although

it hasn't risen as much as it generally

does around this time of year so there

is definitely a missing set of inventory

we're definitely below inventory levels

where we should be

but what's remarkable is this explosion

here really driven by the pandemic you

can see this pause here in 2020 and then

almost a return to trend of this

explosion if anything you might be

slightly below Trend but anyway you had

this explosion here in 2021 and 2022 of

vacation rentals and the question is if

it becomes unprofitable to operate

vacation rentals could these potentially

come on the market for sale and the

answer to that is yes in fact here Nick

argues that ground zero for the Airbnb

collapses a city like Phoenix where

you've really seen a more exacerbated

explosion in the level of short-term

rentals available and the massive

Revenue declines that these airbnbs are

able to generate and they measure these

revenues as total revenues

rather than sort of nightly rates even

though we're seeing nightly rates go up

vacancies are going up for airbnbs which

means total revenues are falling and

these are what we're seeing here uh and

so whether that's Central Texas or

whether that's Phoenix or Washington

Idaho Oregon whatever

and so the point of this is could this

lead

to an increase in the number of units

for sale because for example if Airbnb

owners pivot to long-term rentals now

all of a sudden you put pressure on the

long-term rental market which we're

already seeing this is a very typical

move a typical Airbnb owner says well if

I can't get enough money from Airbnb

I'll just rent it out but what happens

if that becomes unprofitable as well

well then it makes sense to sell

especially if you couple it with a

rising stock market and that's where you

have this recipe for disaster

but nobody knows what's actually going

to happen nobody knows and that's the

confusing part and the frustrating part

because a lot of people are like I can't

wait to get a good deal buying real

estate I want to take advantage of the

concepts and the zero to millionaire

real estate investing course that Kevin

has where he teaches everything that he

knows uh in coordination with

with people with over 30 40 years of

experience in real estate uh all in in a

beautiful packaged together course and

course member live streams where we work

together on making sure we can build our

wealth so a lot of people are are ready

and waiting to buy real estate

but the question is when does the

inventory come thanks to the 30-year

mortgage we don't know because

technically a lot of Airbnb owners and

landlords have locked in rental rates or

interest rates rather below three

percent so we don't necessarily need to

see a flood of inventory but as rents

fall we should as investors pause for a

moment and say okay

where are rents going to bottom because

if you're in a cycle of rents falling

whether that's because airbnbs are

adding to more Supply or owners who

would ordinarily consolidate households

uh and sell Properties or renting those

properties instead of selling them

well then you're putting even more

pressure on the rental market

where does that bottom and before we

have a bottom we've got to ask do we

want to be investing in a market where

rents could fall and it can be more

difficult for us to actually rent out a

property

that's the big question right now

keep in mind that during the pandemic

and a lot of folks forget this during

the pandemic

we had a lot of household formation we

actually had excess household formation

that's a way of saying if you've got

let's say a mom and a dad and then

you've got two college kids during the

Pandemic those two college kids maybe

went out and rented Apartments now you

took one household and you created three

households well now you somewhat have a

reversal of that you have a lot of folks

like hey you know while we figure out

what we want to do and where the economy

goes we find our jobs we're gonna go

live back home with Mom and Dad now

you're taking three households and

you're creating one household that

lowers rental demand in at the same time

as rental uh supplies increasing and

that creates a disaster for rental

pricing

so watching rents not just Airbnb rents

but just nominal rents as well for

long-term rentals it's going to be

critical for the next six months I

really think you really ought to watch

whatever Market you want to invest in

very closely for the next six months

because prices are often propped up by

rents and when rents fall and renting

becomes more desirable you actually

remove buyers who would be buying who

just say why would I buy if I could just

rent for a lot less that's how the free

market works that's how you get to a new

equilibrium I'm not convinced that we've

reached that new equilibrium even though

housing prices have started Rising for

the first six months of 2023

rent prices have not and we're not sure

where that bottom is in rents especially

with the Airbnb disaster ahead of us so

we have to wait to see

what happens or that rental bottom is

and I'm not suggesting you know wait to

buy real estate to perfectly time the

market I'm generally a big fan of don't

wait to buy real estate buy real estate

and then wait but if you are a real

estate investor I do think it's prudent

to look at a market that you're

investing in and under

expect

what the rents are going to be in other

words and I saw that I've seen this in

so many markets I'll give you some

examples I've seen exactly what I'm

about to describe to you in Florida

in Texas in Northern Florida and

Southern Florida and Central Florida and

Austin Texas and Dallas and Fort Worth

in Vegas and Salt Lake City and St

George uh in different parts of

California I mentioned all these places

because I've been to all of these places

just within the last six months I've

been to dozens if not hundreds of

different cities and I'm seeing the same

thing everywhere what am I seeing every

time I go there I look at the available

Rental Supply and the available Rental

Supply is increasing at the same time

sour incentives first month free two

months free uh you know this guarantee

that guarantee it's not a landlord

market right now it's a tenant Market

tenants are driving the boat and that

gives tenants pricing power not

landlords I like being in a landlord I

like being a landlord in a landlord

Market not a tenant Market

tenant markets are harder because you

have to be more competitive with your

pricing and that makes it very important

for you to sharpen your pencil when

you're evaluating does it make sense to

buy this property or not because if

you're buying a property based on what

it was renting for last year you're

gonna get screwed if you're buying an

Airbnb now based on what it was Airbnb

for last year you're going to get

screwed

so

do I think the housing market is going

to utterly collapse like worse than 2008

no absolutely not

do I think that if you're an investor

you have to be very very careful right

now about what you're projecting your

rent is going to be

absolutely and is there a risk that

prices will stagnate or fall yes I

actually think

after the correction we had last year

where prices fell across the board about

10 to 20 percent

and we've had some recovery since then

it's more likely that prices will

actually stagnate maybe we'll get some

kind of trend slowly down I don't think

we're going to go back to what we saw

between 2010 and 2022 for a while which

was basically just real estate only goes

up

you're probably going to have a little

bit of vacillation and maybe even a

slight downtrend

so I think as an investor you want to be

very careful of that if you're not

paying attention to those you'll end up

making mistakes if you are paying

attention to those factors I think

there's going to be a lot of money to be

made in real estate that's why I'm

really really really really excited

about a real estate startup because

there's going to be a lot of money to be

made for people who can identify those

opportunities and invest in the right

areas at the right times so we'll see

those are my takes now I want you to

know this when it comes to AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

by

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