The housing bears are having a viral moment...
Late in June, Nick Gerli of Reventure Consulting took to Twitter to describe a possible 2008-style housing crash. His warning focused on a specific catalyst – the collapse of Airbnb (ABNB).
In his Twitter thread, Gerli claimed that Airbnb's revenues had suffered massive year-over-year declines in May... And he predicted that a wave of distressed inventory would soon hit the market, driving down prices.
This dovetails perfectly with the general fear surrounding U.S. housing. Most folks are surprised that housing prices have held strong over the past year. Everyone is still waiting for what seems like an inevitable crash.
In reality, though, the housing market is far from going bust – and even a viral tweet can't change that.
Let me explain...
It's not hard to see why Gerli's proposition struck a chord. Millions of would-be homebuyers are stuck on the sidelines today, waiting for home affordability to improve.
If a "wave of forced selling" crashed the market, these folks would finally have a ticket to homeownership.
The Twitter thread racked up more than 35 million views in only two weeks. Take a look...
These declines look like the start of a massive bust. But unfortunately for the housing bears, this narrative doesn't hold up to scrutiny...
First, Gerli's numbers come from short-term rental analytics company AllTheRooms. But other sources – like AirDNA, a similar company that tracks the short-term rental market – show much smaller dips in revenue.
These are the nine worst declines in Airbnb's revenue per listing over the same period, based on AirDNA's data...
Again, these are the worst of the declines. According to AirDNA's numbers, Airbnb revenues actually grew in some of the cities from the original Twitter thread. These numbers paint a far different picture than a once-in-a-generation, 2008-style crash.
Most important, if Airbnb owners were caught in a revenue slide like the one Gerli presents, the "wave of forced selling" wouldn't be on the horizon... It would be upon us today.
Let's say Airbnb owners faced a slow-moving, 30%-plus crash like the tweet describes. Sure, some of those owners would hang on to their falling assets the whole way down... But a significant number would be flooding the market with property already.
As revenue dried up throughout 2022, we would have seen a steady drip of Airbnb homes hitting the market. The inventory picture would have softened... But that couldn't be further from the truth today.
Instead, this year, we are facing the tightest housing inventory in American history. Take a look...
America's housing inventory collapsed 39% from May 2019 to May this year. Supply is even lower now than it was during the post-pandemic housing boom.
At the same time, more homebuyers are looking to enter the market... So we shouldn't expect a fall in demand, either. According to a recent Bank of America poll, 56% of millennials and 56% of Generation Z respondents plan to buy a home in the next two years.
Many of them want to buy sooner rather than later. Instead of putting off their plans to buy, 55% of millennials and 62% of Gen Zers want to either speed up their home purchases or buy when they originally intended.
Simply put, demand is high, and supply is low. That's why housing hasn't crashed... And it's why it's unlikely to crash anytime soon.
The "Airbnb collapse" hasn't loosened the supply of U.S. housing... because the collapse isn't happening. Anyone who claims otherwise is probably fishing for clicks.
Sean Michael Cummings
"The supply-and-demand equation is out of whack," Brett Eversole writes. You've heard about the shortage of U.S. housing inventory – but a specific quirk in the housing supply is giving us even more evidence that prices could stay high for years... Read more here.
The slowdown in housing hit a major pain point last year. A key measure of home sales plummeted, falling to rare levels. In the past, though, similar moves have signaled major bottoms in the real estate market... And it could mean that now is a great time to put money to work. Get the full story here.