- A Real-estate agent from Phoenix flipped her four Airbnbs into long-term rentals.
- Peggy Gascon said she enjoyed the "peace of mind" and stability as the short-term market shifts.
The real-estate agent Peggy Gascon says she purchased a four-bedroom property in Scottsdale, Arizona, in 2018 to set as a "primo Airbnb" with a pool table, a bocce court, a putting green, and an outdoor pool.
Today, however, it's rented to four recent college graduates who each pay $1,125 a month to live in it year-round.
"I've been at this long enough to know markets go up, markets go down," she told Insider of her decision to switch.
Gascon, 70, has been in the real-estate business for 30 years and sensed more than two years ago that the tides were turning on short-term rentals. She said the shift was caused by a glut of supply and investors who paid triple the price compared to what she paid five years ago.
"They're basically overcooking the supply," she said of the Phoenix area. "It's the most overheated market I've ever seen in my career."
Gascon is just one host dealing with the shifting tides of the short-term rental market. Travelers are still booking some Airbnbs and Vrbos, but a glut of supply has made it a cruel, indecipherable summer for hosts.
Phoenix has become a testing ground for the new normal in short-term rentals. The market saw Airbnb and Vrbo listings quadruple to 21,000 in 2023, from 5,000 in 2017, according to the short-term rental analytics site AirDNA.
Switching to long-term rentals is one way Gascon decided to stay afloat among diminishing returns. She told Insider about how she made the switch.
She sensed a shift in the market two years ago
Gascon owns four properties: three single-family homes she purchased in 2018 for $400,000 to $500,000 each 2018 and a townhouse she purchased for $274,000 the same year.
She first sensed a shift in the market two years ago, as she watched investors pay up to $1 million for similar properties.
"People caught fire with this whole idea of Airbnb," she said. She acknowledged that most hosts were seeing less revenue but said that hosts who bought at the height of the market were feeling more pain.
Then, her bookings began to drop. At its peak, her townhouse was bringing in $10,400 a month in 2017. In April 2023, bookings totaled just $2,000.
Gascon also said that the burst of travel after the lifting of COVID-19 restrictions had calmed down and that the "combination of all these factors" stopped her short-term rental properties from turning a profit.
'I haven't given up on the concept, I just don't think I want to play right now'
Gascon first took one of her properties offline in the summer of 2021 and wasn't exactly sure what she would do with it. But through the grapevine and her network of fellow real-estate agents, she was approached by four recent college graduates in their 20s who were looking for a yearlong lease.
At first, she was apprehensive. Though now, after two years, they have proven to be reliable tenants.
"I usually consider males in their 20s to be the most irresponsible people alive," she said.
Her four short-term rentals are now rented out long-term, having converted the last one in May. She said it gave her "peace of mind."
"It's stable. When I rent something myself, I'm getting $4,500 a month. With a property manager, that needs to come up to $5,700 to make up the 20% management fee," she said. The market wasn't providing enough income to make the added expense of maintaining the short-term rentals worth it.
Gascon pays for landscaping and pool services, but her long-term renters pay for the utilities.
She is determined to keep the units as long-term, furnished rentals and turned down offers initially to rent them unfurnished. She said she might eventually return to short-term renting on Airbnb and Vrbo if the market became more favorable.
"I haven't given up on the concept, I just don't think I want to play right now," she said.
Have you converted short-term rentals to long-term rentals in the face of a changing market? Tell us about your decision. Reach out to reporter Dan Latu at dlatu@insider.com to share your story.