It seems like lots of ordinary people I know are buying properties and leasing them short term as vacation rentals, becoming their own mini-hotel entrepreneurs. Not only this, but our conversations in social settings often focus on how lucrative this endeavor is. Here in Arizona, people are bragging about how they can pay for a year's worth of their mortgage in a few weeks by leasing their property primarily to midwesterners during MLB spring training. I would imagine this is also happening in many places around the country where Vacations are common (CA, FL, TX, etc...)
I recall that one indication of a bubble occurs when ordinary people begin boasting about financial windfalls in areas they are not experts in (day trading tech stocks in the 90's, flipping houses in the 00's, and now running vacation rentals). The stripper in "The Big Short" who owns 5 condos comes to mind as an example. Or stories about a secretary at the globe.com who became a mulit-millionaire after the company's IPO.
Could this vacation rental phenomenon be a bubble? We all know that Americans dramatically reduce spending on vacations when the country goes into a recession. If millions of Americans are sitting on vacant vacation rentals and the economy turns south could many of them go belly up?
Submitted April 07, 2018 at 05:28PM by warrenfgerald https://ift.tt/2GEAmil
