As in many other tourist destinations in the United States, a large portion of Santa Fe’s housing market is short-term rentals, where guests can stay in family-sized homes for a few nights instead of a hotel.
Oftentimes, owners rent properties through such websites as Airbnb and HomeAway.
But the demand for these vacation rentals, as in so many other sectors of the economy, has dropped off dramatically since Gov. Michelle Lujan Grisham declared a public health emergency March 11 due to the COVID-19 outbreak.
Shane Morris, a Houston-based machine learning engineer, tracks online traffic for short-term rentals across the country and said the market has evaporated in a short span of time.
In Santa Fe, he said, internet searches for terms like “places to stay in Santa Fe” fell by 97%.
“When you lose 97% of your searches on a term, that’s deadly,” he said. “They’ve all cratered in the past two weeks.”
A report from last year indicated that there were more than 1,600 active listings for short-term rentals in Santa Fe, ranking it 12th in the country on a per capita basis.
Morris said those who own multiple short-term units will be affected most by the lack of demand.
One of those people is Mary Ann Kaye, who owns 12 units, all in the same block of Park Avenue, through her company, Casas de Guadalupe.
Kaye said she was planning for a busy season with spring break, but now nearly all her guests have canceled.
“We went from a sold-out situation to a ghost town situation,” she said.
Her company purchased all the units several years ago and converted them from apartments into short-term rentals. Now, she has to figure out how to pay for a dozen mortgages with few or no guests.
“We made all our payments for the month of March, but if this continues into April and May, it’s going to be really difficult,” said Kaye, who is now applying for a small-business loan.
In response to the crisis, many owners of short-term rentals are attempting to lease their units month to month to make up the difference, listing their properties on such websites as Craiglist.
One of those owners is Brenda Wall, who has mortgages on two properties she used as short-term rentals. However, with most New Mexicans now ordered to stay home, she remains unsure she can rent them out for the long term.
Wall said she took out the cash value on one of her life insurance policies – around $16,000 – to avoid foreclosure on her properties.
Based on statistics from a study by Homewise Inc. last year, around 5% of homes in Santa Fe were listed on Airbnb last November alone, a large industry supported by various managers, cleaners and other employers.
Will Risbourg’s company manages 75 homes across the city that are used as short-term vacation rentals and employed 10 people. Now, he has had hundreds of cancellations and had to lay off at least two employees.
“We’re trying to stop the bleeding with some long-term stuff, but it’s been pretty devastating,” he said.
Risbourg does not have mortgages on the properties he manages, but said the owners often rely on rental income to pay the mortgages themselves.
“Many of them have mortgages they’re trying to pay and that’s being affected pretty seriously,” he said.
Mortgages have long been a part of Airbnb’s model. Some lenders, such as Socotra Capital in Sacramento, California, advertise Airbnb-specific loans on their website.
“Despite the vast potential of vacation rentals, lenders still hesitate to make loans on these properties. But not Socotra! We appreciate people trying to earn a little extra money to help pay the bills and create steady sources of monthly income,” Socotra’s website reads.
Morris said the potential for so many closures is reminiscent of the Great Recession and that he expects a spike in foreclosures over the next few months.
“It feels like 2008, where banks did not understand the risks with lending money to people who owned so many properties,” he said.
Risbourg said he hopes the vacation rental market will eventually recover, but that he remains unsure when that will happen.
“Depends how quickly things go back to normal, if ever,” he said.