The COVID-19 pandemic has changed a great deal about how Arizonans—and Americans in general—vacation in 2020, and there’s little indication yet that 2021 will be much better. From restrictions in travel—no going abroad!—to limitations on nonessential businesses, to the occasional full two week quarantine, to fears of what air travel might mean for the health of those who use it, everything has been up in the air. Naturally, this has had some effect on those who own short-term rentals. Particularly the “little guys.”
When Arizona passed legislation ensuring that local municipalities could not interfere with those hoping to engage in short-term rentals, the prevailing rationale was that people would be able to rent their spaces as supplemental income, whether it be an extra room in the house or a whole domicile while they were away for some amount of time. But before too long it became clear that large-scale corporate investors were buying up properties to make a killing off of the short-term rental market that has sprung up over the past few decades, particularly with services such as Airbnb. That’s why there has been some walk-back in recent days.
But it appears that the COVID-19 pandemic has accelerated the trend toward consolidation in the short-term home rental market. Those owning just one or a few properties are facing the lack of travel and doing what they can to sell off their properties as they lose money month-by-month as the lockdowns continue. The U.S. Travel Association has reported hundreds of billions of dollars worth in travel economy losses just since the beginning of March.
And who is buying these properties up? Large property owners with deep pockets. It’s the equivalent of monied interests buying big into the stock market when the market is down, while everyone else is looking to cut their losses. They are banking on the likelihood that the market will pick back up—in this case not necessarily the real estate market, which may see a great number of foreclosures in the coming months, but the short-term rental vacation market. And Arizona, a state with strong pull as a destination in domestic vacation travel, is a good place to make this happen. (Especially if international travel continues to be difficult to pull off in the wake of COVID-19, which it may be, given that other nations are wary of America’s high case count.)
If you’re dealing in short-term rentals in Mesa or anywhere else in the state of Arizona, call us to consult with an experienced attorney with strong scruples. At Provident Law, our real estate attorneys represent parties on either side of real estate and financing transactions, including landlords, tenants, buyers, sellers, lenders, borrowers, trustees, guarantors, shareholders, partners, and others. We structure, negotiate and document a variety of real estate and financing transactions, such as leases, purchase and sale agreements, loans and development agreements for a variety of commercial and residential projects. We also help to settle all forms of boundary disputes. Contact us for more details.
Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.
Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at Chris@ProvidentLawyers.comor at 480-388-3343.