Convinced that the boom in leisure travel is permanent, Airbnb aims to expand its listings by convincing more people to turn their homes into short-term rentals.

The company said Wednesday that it will increase the amount of liability coverage for hosts, up to $3 million, in a play for owners of nicer houses in high-cost places such as California. It will also pair newbies with a “superhost” to guide them through the process of becoming a short-term landlord, from signing up through welcoming their first guest.

More listings would not seem to be Airbnb’s biggest challenge. CEO Brian Chesky says the San Francisco company is taking steps to make price more transparent when consumers browse Airbnb listings, and he predicts that will reduce sky-high cleaning fees that many hosts tack on well into the booking process — a major complaint of consumers.

The company also continues to try to crack down on large parties at rentals, a few of which have turned violent. And it faces efforts to increase regulation of short-term rentals. Through it all, Airbnb has fared better than most travel companies during the pandemic. This month, it reported a record $1.21 billion profit for the third quarter.

Its stock fell, however, because earnings and bookings were less than Wall Street expected and the company gave a cautious fourth-quarter outlook. Investors worry that consumers paying more for food, gas and housing — and facing predictions of recession — will cut back on discretionary spending like travel, hurting Airbnb. Some current hosts are worried that might already be happening.

Last month, a post on a Facebook page for Airbnb “superhosts” asked, “Has anyone seen a huge decrease in bookings over the last 3 to 4 months? We went from at least 50% occupancy to literally 0% in the last two months.” Other hosts on social media have suggested theories ranging from a fragile economy to pent-up travel demand finally running out, and some think the problem might be that Airbnb already has too many listings. AirDNA, which tracks short-term-rental numbers, said Airbnb listed nearly 1.4 million rentals in the U.S. in September, a 23% jump from a year earlier and 9% over 2019.

Nearly two-thirds were added since 2020. The trends are similar for global listings. Chesky said in an interview that Airbnb has enough hosts now — he didn’t say it has too many — but needs more because leisure travel will keep growing. And, he said, a recession could push more people to turn their homes into Airbnbs. After all, he likes to point out, Airbnb launched during the great recession in 2008. “People are pulling back spending in tons of areas, but not travel,” he said. “And with a looming recession, we felt like more people than ever are going to want to make extra money.”

Potential hosts sometimes hesitate, Chesky said, because they are uncomfortable having strangers in their homes. The company’s response is to triple the amount of coverage for hosts — from $1 million to $3 million — against damage, including to vehicles, boats and a wider range of art on the property. Chesky is betting that will persuade more owners of nice homes to list them on Airbnb. “Exactly, and home values have increased since we wrote the $1 million plan,” he said. “We just noticed more than 20% of the homes on Airbnb, and maybe even more than that, were over the $1 million limit in value.”

The company said it is also launching a system to verify the identity of guests and flag potential parties, immediately in the U.S. and Canada and worldwide by next spring. Chesky said the system is “not a silver bullet,” and he didn’t provide many details but said in the U.S. it will include a check of criminal and sex-offender records.

In the meantime, the company is working on a plan to display the all-in price of a stay up front on its app and website — an amount that would include cleaning fees, which can be very high and only appear later in the booking process. Chesky said he didn’t want to bar or cap cleaning fees — that’s a decision for hosts, he said. But including fees in the upfront price — and in the order in which search results are displayed — “is going to correct the market,” he said.

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Britney Nguyen,Madison Hoff | Contributed

• Demands for rental units are declining as housing costs soar with the price of essentials like food.

• The average renter in the US would have to work over 64 hours to afford rent, Zillow data shows.

• Phoenix, Orlando, and Las Vegas are among the metropolitan areas where demand is slowing the most.

The typical US worker would’ve had to put in over 64 hours of work to be able to afford the average rent payment in September.

That’s an increase of a full 8-hour work day compared to the same time two years ago, when workers had to put in around 56 hours to be able to afford rent, data from Zillow shows.

The beginning of 2022 saw rent prices peak at almost 18% year-over-year growth, but now year-over-year growth is at 7.5% , according to Apartment List. Current rising inflation is adding more pressure to renters now, who have to deal with rising rent each year , and who Bloomberg said are “more likely to have less stable jobs and incomes.”

“Rents have grown much faster than incomes, putting the squeeze on renters’ budgets,” Jeff Tucker, senior economist at Zillow, told Insider.

The data, which starts in 2015, shows that the hours needed to work to afford average rent in the US have fluctuated since then, and dipped the most during the beginning of the pandemic. Since the start of 2021, it’s mostly been on an incline.

Demand for rental units is slowing down as people have a harder time balancing soaring rents and the price of essentials like food and gas, with wages that are not keeping up with rising inflation.

“Rents have had a historic run-up, way beyond what fundamentals would justify,” Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School, told Bloomberg . “The Fed will not ease up until inflation abates, which requires rents to slow, the sooner the better and the harder the better, for quick relief.”

In metropolitan areas like Phoenix, Orlando, and Las Vegas, demand for rental units is slowing down the most , according to rental-data tracker RealPage.

This summer, the rental vacancy rate leached 40-year lows, and it may stay low in the near future, Tucker said.

“It’s possible more renters than usual will opt to renew where they are to avoid moving costs while so few other options are available, or maybe even double up with roommates to reduce costs,” Tucker said.

Other reasons for slowing demand include more younger people choosing to live at home compared to earlier during the coronavirus pandemic when housing demand was higher because people were moving out or choosing to move somewhere else due to remote work.

The good news, Tucker said, is that rent growth is “cooling off,” and there are more rental homes that will be available. Twice as many multifamily homes are being built right now than during the last peak in 2008, he added.

“Still, it may be several months before we see these units help raise vacancy rates and further east pressure in the rental market,” Tucker said.

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Cities across the United States are lifting quarantine-era rent forgiveness policies soon. But are Americans any more ready to pay rent than they were before the pandemic?

The pandemic has upended the world as we know it in nearly every aspect of our lives — our jobs, schools, and social lives have had to drastically change to fit the new normal. With the unemployment rate at a historic high, paired with legally mandated stay-at-home orders, many Americans have found themselves in a difficult situation, as paying rent has never been more difficult yet necessary.

In late March and early April, many cities across the U.S. instituted measures such as eviction moratoriums and rent freezes to accommodate these extenuating circumstances. Under an eviction moratorium, landlords are prevented from evicting tenants during this public health emergency (and thirty days beyond its declared end). Rent freezes ensure that rent prices cannot increase. However, as more cities continue to re-open, these housing security measures are set to end, even as they have helped many families maintain a safe place to live. If cities with copiously high rent burdens allow their eviction moratoriums to expire, they may face a homelessness crisis compounding on an already quickly-spreading outbreak.

The national discourse around rent affordability may be under the national spotlight due to stay-at-home orders, but these issues predate the pandemic and will continue to affect Americans after. According to the United States Census Bureau, both average rent prices and the number of rental properties have followed an upward trajectory within the past decade — between 2012 and 2016, four out of five U.S. metropolitan areas experienced rent increases, and the national average for median gross rent rose by $21. One potential factor in this trend is the housing market crash in 2008, which had widespread ripple effects on the real estate market and overall housing costs. However, as the quarantine era has clearly shown, the ability for many people to afford their rent is erratic, especially given that the American economy has yet to fully recover to its pre-pandemic state. The conversation around housing access in the U.S. should continue after the eviction moratoriums and rent freezes end. To that end, the data and research team at Insurify studied rent and demographic data to determine the top twenty cities whose residents are paying the most in rent, proportional to their income.

Insights

National averages. Across cities in the United States, the average share of renters paying 50% or more of their household income on rent was 23.61 percent. The median gross rent was $966.27 per month. The percent of city populations below the poverty line was 16.67 percent.

Greater affordability. The U.S. cities with the lowest share of renters paying 50% or more of household income on rent were Mauldin— Simpsonville (SC), Paso Robles—Atascadero (CA), and Casper (WY) at 12.34, 13.49, and 14.18 percent, respectively.

Most, but not all, have high poverty rates. While the majority of the cities on this list have a greater-than-average percentage of their population living below the poverty line, not all cities on this list follow that trend. Notably, Miami (FL), Vineland (NJ), and Watsonville (CA), all have a lower-than-average proportion of their population living below the poverty line. In fact, Miami’s is 9 percent lower than the national average. That said, many of these cities’ shares of impoverished citizens greatly exceed the national average. San Marcos (TX) has 50 percent more of its population under the poverty line than the national average, at 32.8 percent.

Big city dreams? Interestingly, many notoriously expensive cities such as New York City, Los Angeles, San Francisco, and Seattle, did not make the list. An explanation for this phenomenon is the relative wealth of those cities that are always lauded to have such high rents. Many of the aforementioned cities are home to lucrative industries such as finance, entertainment, and tech. While the median rent may be higher than average, the higher volume of wealth held by city residents means that there are smaller proportions of the population where rental prices consume 50% or more of a renter’s income. The trend of gentrification in these cities, or how many former residents are being priced out by wealthier newcomers, can also account for this finding.

Methodology

The data and research team at Insurify, a home insurance quotes comparison site, referred to data from the American Community Survey by the United States Census Bureau to determine the twenty cities paying the most in rent. In this study, cities were designated by their status as an urbanized area by the U.S. Census Bureau. The U.S. Census Bureau defines “urbanized area” as a densely populated urban territory that encompasses 50,000 or more people.

The share of renters paying 50% or more of household income on rent was calculated by taking city-level estimates of renters paying 50.0 percent or more of household income on gross rent in the past 12 months compared to the total population of renters. Median gross rent and the percent of the population below the poverty line were also taken from the American Community Survey’s most recent calculations. The U.S. Census Bureau measures poverty by subtracting the poverty threshold, or the minimum level of income deemed adequate for a family of a particular size, from the total household income, inclusive of all family members earning an income for that particular family unit. If a family’s total income is less than their designated poverty threshold, they are considered to be under the poverty line.

U.S. Cities Paying the Most in Rent

20. Bellingham, WA

Share of Renters Paying 50%+ of Household Income on Rent: 31.84%

Median Gross Rent: $1,012

Percent of Population Below Poverty Line: 18.30%

19. Athens-Clarke County, GA

Share of Renters Paying 50%+ of Household Income on Rent: 31.90%

Median Gross Rent: $849

Percent of Population Below Poverty Line: 28.80%

18. Miami, FL

Share of Renters Paying 50%+ of Household Income on Rent: 32.02%

Median Gross Rent: $1,299

Percent of Population Below Poverty Line: 15.30%

17. Vineland, NJ

Share of Renters Paying 50%+ of Household Income on Rent: 32.03%

Median Gross Rent: $988

Percent of Population Below Poverty Line: 15.90%

16. Watsonville, CA

Share of Renters Paying 50%+ of Household Income on Rent: 32.65%

Median Gross Rent: $1,385

Percent of Population Below Poverty Line: 16.30%

15. Hemet, CA

Share of Renters Paying 50%+ of Household Income on Rent: 33.44%

Median Gross Rent: $1,099

Percent of Population Below Poverty Line: 20.40%

14. College Station — Bryan, TX

Share of Renters Paying 50%+ of Household Income on Rent: 34.39%

Median Gross Rent: $932

Percent of Population Below Poverty Line: 27.50%

13. Greenville, NC

Share of Renters Paying 50%+ of Household Income on Rent: 34.50%

Median Gross Rent: $788

Percent of Population Below Poverty Line: 25.90%

12. Chico, CA

Share of Renters Paying 50%+ of Household Income on Rent: 34.54%

Median Gross Rent: $1,048

Percent of Population Below Poverty Line: 23.20%

11. Auburn, AL

Share of Renters Paying 50%+ of Household Income on Rent: 35.00%

Median Gross Rent: $793

Percent of Population Below Poverty Line: 29.40%

10. Bloomington, IN

Share of Renters Paying 50%+ of Household Income on Rent: 35.14%

Median Gross Rent: $893

Percent of Population Below Poverty Line: 29.20%

9. San Marcos, TX

Share of Renters Paying 50%+ of Household Income on Rent: 35.41%

Median Gross Rent: $990

Percent of Population Below Poverty Line: 32.80%

8. Iowa City, IA

Share of Renters Paying 50%+ of Household Income on Rent: 35.80%

Median Gross Rent: $972

Percent of Population Below Poverty Line: 21.10%

7. Corvallis, OR

Share of Renters Paying 50%+ of Household Income on Rent: 35.91%

Median Gross Rent: $1,018

Percent of Population Below Poverty Line: 25.00%

6. Ames, IA

Share of Renters Paying 50%+ of Household Income on Rent: 36.74%

Median Gross Rent: $902

Percent of Population Below Poverty Line: 28.00%

5. Boulder, CO

Share of Renters Paying 50%+ of Household Income on Rent: 37.13%

Median Gross Rent: $1,465

Percent of Population Below Poverty Line: 19.30%

4. State College, PA

Share of Renters Paying 50%+ of Household Income on Rent: 37.73%

Median Gross Rent: $1,026

Percent of Population Below Poverty Line: 27.80%

3. Ithaca, NY

Share of Renters Paying 50%+ of Household Income on Rent: 37.75%

Median Gross Rent: $1,179

Percent of Population Below Poverty Line: 29.70%

2. Davis, CA

Share of Renters Paying 50%+ of Household Income on Rent: 40.84%

Median Gross Rent: $1,442

Percent of Population Below Poverty Line: 30.40%

1. San Luis Obispo, CA

Share of Renters Paying 50%+ of Household Income on Rent: 43.43%

Median Gross Rent: $1,459

Percent of Population Below Poverty Line: 30.80%

If you have questions or comments about this article, please contact insights@insurify.com.

-Emily Leff

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