Domestic travel up 20% from 2019

Domestic travel up 20% from 2019
by Brad Cartier, posted in Newsletter

We’ve covered the rise in domestic travel before, but new data is pointing to an even stronger rebound. In a recent blog post, Dillon DuBois of short-term rental data aggregator AirDNA reports that across the U.S. vacation rentals bookings are up 20% compared to 2019. This is despite the ongoing pandemic and continued lockdown. Clearly, people are eager to get out!

U.S. Vacation Rental Bookings up 20% nationally despite pandemic

Source: AirDNA

According to AirDNA’s data, here are the top cities across the U.S. with the highest increase in year-over-year short-term rental bookings:

  1. McHenry, MD (+421%)
  2. Atlantic Beach, NC (+328%)
  3. Oakland, CA (+311%)
  4. Spicewood, TX (+264%)
  5. Broken Bow, OK (+235%)
  6. Red River, NM (+233%)
  7. Red Lodge, MT (+230%)
  8. Swanton, OH (+225%)
  9. Lake Havasu City, AZ (+217%)
  10. Michigan City, IN (+216%)

The places with the biggest drop are the larger city centers: Boston (-71%), Cambridge (-64%), and Los Angeles (-61%).

Similarly, Hotel Business covered a new report from SiteMinder titled Changing Traveler Report 2020: Special COVID-19 Edition. In this survey, SiteMinder found that 48% of Americans plan on traveling domestically within the next 12 months despite ongoing pandemic concerns.

More potential good news for STR owners, Natasha Anderson of Fox5 reports on speculation that the federal government may offer a stimulus package to vacation rental owners who have been hit hard during the pandemic.

Couple this with a recent article I wrote on the merits of pivoting space in short-term rentals to accommodate the work from home trend. This will help vacation rental owners optimize their tenant profile for domestic travelers who still require workspaces.

Mortgage rates

Mortgage rates are at record lows, but delinquencies are inching upward as Americans begin to feel the long term economic effects of the pandemic. Kathleen Howley of Housing Wire reports that mortgage delinquencies hit 7.76% in May, up from 6.45% in April, and 3.39% in March.

That said, mortgage rates still sit at historically low levels. Jacob Passy of MarketWatch reports that “Mortgage rates have fallen to a new all-time low for the fourth time this year. But there’s significant upside risk to the low rate environment…The 30-year fixed-rate mortgage averaged 3.13% for the week ending June 18, down eight basis points from a week earlier.” The previous low was 3.15% in April.

In a separate Housing Wire article, Howley reports on comments from Fannie Mae from Monday: “The annual average rate for 2020 will be 3.2%, down from 2019’s 3.9%…Fannie Mae expects rates to drop to 2.9% in 2021…The low rates probably will boost refi volume to $1.78 trillion this year, according to the forecast, which would be the highest level since 2003.”

Aly J. Yale of Forbes reports on the low-interest environment, noting that it has spurred higher housing activity despite the pandemic, with applications to purchase a home up 21% year-over-year, and refinancing activity up 106% than in 2019.

Real estate leading an economic recovery?

According to Fannie Mae, housing sentiment is up 4.5 points in May, to 67.5 following all-time lows in April. In its commentary, Doug Duncan, Chief Economist at Fannie Mae, stated that “Although weakened income perceptions and continuing job loss concerns, particularly among renters, are likely weighing on many would-be buyers, purchase mortgage applications have returned to mid-March levels when pandemic response measures began ramping up.”

According to the National Association of Home Builders (NAHB), construction sentiment has risen substantially by 28 points between April and May, hitting 58. Dean Mon, NAHB Chairman, comments on this data, noting that “as the nation reopens, housing is well-positioned to lead the economy forward. Inventory is tight, mortgage applications are increasing, interest rates are low, and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

Demand is strong and inventory is tight, according to Redfin, who’s recent data shows a 25% jump in homebuying demand beyond pre-pandemic levels. Glenn Kelman, Redfin’s CEO, states that “It seems that nothing can deter homebuyers. Seasonally adjusted demand for the week of June 1 – June 7 is now 25% higher than it was pre-pandemic in January and February, marking the eighth straight week of rising demand.”

Indeed, Hari Kishan of Reuters published an article worth reading this week titled, U.S. housing set to ride out the pandemic’s economic storm: Reuters poll. According to their June poll of housing experts, house prices will increase by 3% in 2020 and 2021.