Airbnb hosts are worrying about an 'Airbnbust.' Here's the main reason some short-term-rental owners are experiencing a rough patch.

Some hosts are seeing bookings slow, even as Airbnb earned record profits. People who thought short-term-rentals were a surefire way to make money may be in for a rude awakening.

• Many people saw short-term rentals as a way to make money during the pandemic.
• Now an oversaturation of hosts has led to more Airbnbs, leading to booking slowdowns in some areas.
• People who bought short-term-rental properties to make money may be in for a rude awakening.

Shelby Church, a host with Airbnb, posted a video on YouTube in October breaking down how much money her Palm Springs, California, Airbnb lost over the summer. 

After factoring in expenses, she told her 1.75 million subscribers that she lost nearly $10,000 from June through September. In an earlier video, she shared that she had netted over $12,000 in March alone. She did not respond to Insider's request for an interview.

Church's experience highlights how the lofty expectations of short-term-rental owners may be coming back to Earth. Airbnb hosts in certain areas are experiencing booking slowdowns that some people are calling an "Airbnbust." 

The phrase has grown in popularity on Twitter, YouTube, and Reddit. Prompting a recent flurry of online discussion over the term, Amy Nixon, a resident of Dallas-Fort Worth, Texas, screenshotted two Facebook comments from hosts asking if others were experiencing slowdowns in bookings and tweeted them on October 16. Nixon, a stay-at-home mom with an economics degree who has worked in journalism, added the caption: "The Airbnbust is upon us," in a post that has since garnered 53,000 likes.

Airbnb, however, is experiencing no such bust. The $60 billion company posted a record $2.88 billion in revenue and $1.2 billion in profit in its third-quarter earnings call on Tuesday. Airbnb also announced Monday efforts to be more transparent in pricing, allowing guests to see the total cost of a stay, including cleaning fees, and launching a tool to help hosts price their units more competitively.

Still, some hosts are feeling more strained than they expected. 

Nixon told Insider that her tweet came after she'd noticed changing attitudes in posts in a 196,000-person Airbnb Superhosts Facebook group. 

"I would say it's happened over the last several months," she told Insider. "There was a shift probably sometime mid-summer, which was right around the time the housing market in general started to tip."

On October 26, Adam Taggart, creator of the personal-finance platform Wealthion, invited Dixon to analyze the short-term-rental market as an amateur housing analyst.

Nixon told Insider the slowdowns hosts have been seeing in recent years come from one main source: too much supply.

Of the 1.2 million Airbnb listings in the US, 62% have been added since 2020, according to a chart that Jamie Lane, the vice president of research at the short-term-rental analytics firm AirDNA, tweeted on October 18. The number of available Airbnb listings grew to 1.38 million in August 2022, up from about 1.07 million year-over-year, according to AirDNA.

Over the past two years, many people decided to invest into short-term rentals in search of so-called "passive income," a concept describing making additional money from side hustles with little-to-no effort.

During the period of historically low interest rates in 2021, thanks to the Federal Reserve's standard, many buyers felt emboldened to invest in homes for the sole purpose of listing them on Airbnb — a tactic that has been effective for some.

In addition to monitoring the Facebook group, Nixon has observed how short-term-rental investors near her in Texas are behaving. 

"I started to notice about a year ago there was an uptick in people saying, 'Hey, I'm picking up this extra property in Broken Bow, Oklahoma,'" Nixon said. "Suddenly every three people you know are talking about how they're going to do this Airbnb property."

An abundance of long-term bookings due to loosened travel restrictions and remote-work policies spoiled newcomers who joined during the Airbnb boom. And if bookings stalled and the hosts were relying on the Airbnb income to cover the mortgage, those hosts had a safety net because home prices were still going up, Nixon said. They could sell and still come out on top.

But now, home-price appreciation has slowed and, in a few places across the US, home prices are actually falling. That puts people who invested in short-term rentals, but aren't seeing as much revenue as they planned, in a tough position.

"My personal opinion is that the loose monetary policy over the last 2 ½ years has fostered a housing market that gives everybody a participation trophy," she said. "Anybody that bought a property — whether they were doing a good job running it or not, whether they researched the area, picked a good location, did a good job cleaning and presenting the property — just by owning the home, they could make money in the equity increase."