Late June has arrived, and Roselle Levy, a 65-year-old woman, has just returned home to Boston from her rental property on Martha’s Vineyard, an island off Cape Cod. As the summer season approaches, she’s been busy getting her rental home ready for holidaymakers. This includes completing the final touches on cleaning, adding a few more planters to the garden for an extra pop of color, and meeting with contractors to arrange maintenance work for the fall.
For those looking to escape the bustle of New York and Boston, the area offers a perfect combination of natural beauty and history. From charming towns with clapboard homes and gingerbread cottages to long sandy beaches and secluded lighthouses, Martha’s Vineyard has it all. Levy particularly enjoys hiking at Long Point Wildlife Refuge, where she can explore trails leading to the southern shoreline and admire the picturesque Oyster Pond, Homer Pond, and Long Cove.
“The weather has been quite hot lately, and now everything is lush and vibrant,” Levy remarks. “Beach roses are blooming in the sand dunes, and peonies and hydrangeas are adding bursts of color to gardens all over town. This place is truly at its most beautiful right now.”
However, this year, Levy finds herself renting out her home in a different market. Across the United States, the demand for short-term stays has significantly decreased. Data from All The Rooms, a platform that tracks the short-term rental market, recently went viral on Twitter, revealing that revenues for typical listings in the hardest-hit cities, such as Phoenix and Austin, were roughly half of what they were in the same period last year. (Another company, AirDNA, disputes these figures, suggesting that the largest revenue drop is around 15% for New Orleans.) On Cape Cod, Martha’s Vineyard, and Nantucket, the demand for short-term rentals has plummeted, while the supply has increased. Many pandemic-era buyers who initially sought refuge in these areas have returned to their city homes and are now looking to earn income from their properties to offset high purchase prices and increased expenses.
During the early days of the pandemic, buyers flocked to this region to escape the city. In 2020, both sales numbers and median sales prices reached new records, increasing by 19% to 6,113 and 18% to $570,000, respectively, compared to the previous year, according to the Cape Cod and Islands Association of Realtors. Many buyers decided to make the move permanent, leading to a population increase of 3,453 in Barnstable County between April 2020 and July 2022, as reported by the US Census.
The surge in people seeking short-term stays was also fueled by the rise of remote work and travel restrictions, which prompted Americans to choose domestic destinations for their vacations. Booking numbers on WeNeedaVacation.com, a vacation rental agency for Cape Cod homeowners, increased by 28% between 2019 and 2021.
“Both 2021 and 2022 were fantastic for us; our income nearly doubled compared to pre-Covid years,” says Levy, who has been renting out her Martha’s Vineyard home for 25 years. “People wanted longer stays, and they weren’t limited to just the summer months. They simply wanted to get away.”
However, this year presents a stark contrast. As of the beginning of June, bookings on WeNeedaVacation.com were 33% lower than the previous year. Furthermore, the number of available short-term rentals has risen by 18% during the same period, reaching 3,700.
In March 2020, Jessica, a 33-year-old who prefers not to share her full name, and her husband relocated from New York City to their rental investment property in Cape Cod. They stayed there until the end of 2021 when her husband’s finance job required him to return to the office regularly. Last summer, they returned for an extended stay. However, job redundancies have left both of them unemployed for several months, creating a financial gap that they hope the rental income from their home can help fill.
“Our goal is to maximize our earnings from the property this year to rebuild our wealth,” says Jessica. “It will be our first summer with minimal time spent there.”
At the higher end of the short-term rental market, the supply has surged. Blake Decker, CEO of vacation rental management company Pretty Picky Properties, reveals that most of their homes rent for $9,000 to $10,000 per week during the peak months of July and August. Decker has been inundated with owners looking to list their properties with his company.
“Since April, we’ve had to turn away new customers,” he says. Peak season occupancy rates have decreased by 10% compared to last year, but they would have been even lower if owners hadn’t reduced prices to attract last-minute bookings.
Aside from facing increased competition and dwindling customers, homeowners striving to make their properties profitable this year are also encountering higher costs. Rob, who prefers not to share his surname, purchased a rental property in Centerville, Cape Cod in 2021. He estimates that operating costs have risen by 40% to 50% over the past year. Gas and electricity expenses have doubled, and while Rob can closely monitor energy usage with the help of smart devices in his home, he is hesitant to ask guests to conserve energy.
“Now that they have more rental options, guests have become more demanding. It’s challenging to push back when they leave the AC running with the door open,” he explains.
But the surge in short-term rentals does nothing to alleviate the difficulties faced by local workers who struggle to afford housing due to Cape Cod’s rising home prices. According to a report commissioned by the Cape Cod Housing Assistance Corporation, in 2021, those working in the leisure, hospitality, or retail industries would have had to spend 53% of their income to afford the average rent in Barnstable County.
Barbara-Anne Foley, a 61-year-old homeowner, and her husband purchased a home in Sandwich in 2021. They will soon move into a flat they created by converting their garage, while their son and his family occupy the main house.
“They’ve lived on the Cape their whole lives; this was the only way they could continue living here,” Foley explains.
In response to pressure from affordable housing advocates, local towns have started relaxing permitting rules to allow for the construction of “granny flats” like the one built by Foley. Nevertheless, the increasing intensity of home use on Cape Cod has had a detrimental impact on the environment. Mashpee, for example, heavily relies on septic tanks for a majority of its roughly 15,000 homes, leading to a decline in water quality.
The wastewater released into local waterways has heightened nitrate levels, fueling the growth of algae, which in turn reduces oxygen levels and harms a variety of invertebrates and fish. Ashley Fisher, head of Mashpee’s Department of Natural Resources, laments the disappearance of certain species like blue crabs, striped bass, and softshell crabs in rivers such as Mashpee River and Little River’s upper reaches.
To combat the declining species diversity, the town has begun constructing a $66 million sewage treatment facility. By 2025, the first group of 420 homes will be connected to the system, but Fisher warns that water quality will have further deteriorated by then.
“The environmental degradation will continue to worsen due to the growing number of full-time residents and the increasing number of people working from home,” Fisher explains.
Back in Centerville, Rob is taking the necessary steps to navigate the challenging short-term rental market. He’s doubling down on marketing and promotions, investing in improving the interior of his home, and even considering constructing a pickleball court on the property, which would cost approximately $50,000. His plan is to attract visitors from all over the United States and extend the rental season beyond the usual peak period from the end of June to early September.
“I have to put in more effort to find guests to fill my home, and I’m spending more money than expected to keep my property top of mind for holiday renters. But I believe I’ll succeed by expanding the rental season,” he affirms.
“As an investor, the profit margins aren’t tremendous here,” he continues. “However, it allows me to own a beautiful home in Cape Cod that I can…”
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