New: 🧠 Market Minds Issue #017

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Airbnb Earned Nearly $10B Last Year

More than double pre-pandemic.

But they announced a net loss of $349 million in the fourth quarter of 2023, despite experiencing significant growth in booking value and nights booked. The company's earnings release on Tuesday revealed that the loss was primarily due to one-time tax expenses totaling over $1 billion. 

Despite the loss, Airbnb had a successful year overall, earning a total revenue of $9.9 billion, with nearly half of that amount being company profit. This represents a substantial increase compared to the previous year, as the company more than doubled its total revenue from 2019, before the COVID-19 pandemic disrupted the travel industry.

Airbnb's annual profit for 2023 reached $4.8 billion, a 156 percent increase from the previous year when the company reported a loss of $ 674 million.

Airbnb CEO Brian Chesky expressed pride in the company's accomplishments over the past year and emphasized that there is more to come.

Weak Rental Price Growth Predicted for 2024

Yardi Matrix, a leading provider of real estate market intelligence, is predicting weak rental growth throughout 2024. According to their national multifamily report for January, multifamily rental prices remained flat in January, with an average rent of $1,710.

This is unchanged from the previous month and represents a mere 0.5 percent increase from a year ago. The lack of growth can be attributed to the influx of new supply in the market, which has dampened prices.

During 2023, approximately 500,000 new multifamily rental units were completed, as projects that started during the pandemic reached their completion. This trend is expected to peak in 2024, with another 540,000 units projected to come online this year.

The increase in supply is keeping rent growth down, according to Yardi Matrix. However, the report notes that new supply is expected to drop off after 2024, as multifamily starts have decreased in recent years due to high interest rates and construction costs.

New Loan Product

With the housing market experiencing a surge in demand, homes are receiving multiple bids, making it challenging for buyers to secure a property. This is especially true for first-time buyers who may struggle to compete with all-cash offers. According to Redfin data, the share of homes purchased with all cash reached a nine-year high of 34.1% in September.

CrossCountry Mortgage’s (CCM) CashPlus program aims to level the playing field by allowing borrowers to submit cash offers, even if they are not able to pay in cash upfront.

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The Ultimate Playground

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TL;DR (Too Long; Didn’t Read)

In 2023, despite Airbnb's impressive $9.9 billion revenue, they faced a $349 million loss in the fourth quarter, largely due to one-time tax expenses. However, the company still made substantial profits, with $4.8 billion for the year. CEO Brian Chesky expressed confidence in future success. On the other hand, Yardi Matrix predicts slow rental growth in 2024 due to an oversupply of rental units, with around 540,000 more expected to come online this year. To aid homebuyers facing tough competition, CrossCountry Mortgage introduced a new loan program allowing borrowers to submit cash offers without upfront cash payment.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team