There’s a story being reported left and right. The story is about commercial real-estate. With the global lockdown happening right now, commercial properties are going to go through a massive setback. Retailers have united to the call of not paying any rents until the businesses open.
Most small businesses have cash that would last no longer than a month. Many of these will have to permanently close down. As a cascading affect, commercial real estate as a whole would be losing value. REITs are already trading much lower.
There’s another story being reported heavily. It’s about the travel industry. No one expected or prepared for travellers to disappear. Many airlines would go bankrupt without financial support from the governments. I can’t imagine how bad hotels are right now. Especially small and medium hotels who are running the show on rented properties. Many of these will permanently close down.
There’s another story but that’s very under-reported so far. It’s about the residential real-estate which I originally thought would stay unaffected but I’m curious whether that’s the case. It’s about the Airbnb’rs. The super hosts. Semi-pros who are in a pretty bad situation. Their odds of coming out of this just as good as someone trading crypto on a 10x leverage. Slim. Let me explain myself.
Airbnb hosts begin by renting a property. They are able to then sublet this property at a 3x higher price. After setting aside profits, they are in a pretty good position to rent or mortgage the second property. Eventually many super hosts are hosting as many as 10 properties. And they have absolutely no one staying at any of their properties. Their cash is evaporating fast and there is a real trouble brewing.
The question that I’m trying to find answer for though is whether this could affect residential prices just as I expect the commercial real estate to suffer.