Now that the “AirBNBust” is officially happening, it will be interesting to witness the conversion of Short-Term Rental (STR)
daily rates to Long-Term Rental (LTR) monthly rates.
According to the Denver Gazette, Colorado is experiencing the highest Airbnb revenue “crash” in the country.
May 2022 to May 2023, Denver reportedly saw a monthly STR revenue per month drop from $3,374 to $2,071 – a decrease of 38.6%. During the same period, Breckenridge saw a monthly STR revenue per month drop from $4,193 to $2,633 – a decrease of 37.2%.
According to the Gazette, the “real nail in the coffin” will come if the Colorado legislature reclassifies STRs as commercial property for property tax purposes. Per Senate Bill 33, a $550,000 property (under current law) has an annual property tax $2,300 per year. If Senate Bill 33 passes, that annual property tax bill will increase to $9,800 per year.
I hope local Pagosa Springs Realtors are advising their clients to not expect vacation rental incomes to help offset higher mortgage rates, and higher appraised valuations.
In addition, I hope local Pagosa Springs Realtors are advising clients that renting an illegal STR property(s) can be a dangerous venture. Archuleta County can impose a $100 per day fine for advertising or renting illegal STR(s).
Certain STR owners — Realtors in Pagosa Springs — are now advertising a 75% discount for renting their privately-owned STR property for thirty days or more.
As an example, as advertised on LinkedIn, a STR where vacationing tenant rents and occupies the upstairs, while a Pagosa Springs Realtor lives in the downstairs. Per LinkedIn, it’s possible to rent an STR in Pagosa Springs for thirty days or more — “for less than the price of a weekly rental as an STR”. (A Short-term Rental is defined as a unit rented to a customer for less than 30 days.)
A particular $1 million fully-furnished STR property is now available (utilities included) for $3,500 per month.
Interesting math. $500 per day x 7 days = $3,500… when rented daily as an STR.
A 75% discount when rented monthly as an LTR: $3,500.
Hopefully, now that the “AirBNBust” is “officially” happening… more Long-Term Rental affordable housing might become available… for less than the price of a weekly STR vacation rental?