Interest-Rate Cuts Slow Down: What Does That Mean for Homeowners?

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Hello, and welcome to Snowball Rentals’ WeChat account, where you can read about recent developments in the US short-term rental market.

On December 18, 2024, the Federal Reserve announced a 25-basis-point cut in the target federal funds rate range to 4.25%–4.5%, while signaling that it might slow or pause further cuts.

At the same time, Trump repeatedly pressured the Fed to make larger rate cuts, but did not change the current policy stance.

We will examine the opportunities and challenges this policy presents on both the supply and demand sides of short- and mid-term rentals to help owners respond to market changes.

1. High mortgage rates suppress homebuying demand and increase short- and mid-term rental supply

Although the Fed cut rates, mortgage rates remain high, significantly reducing homebuyers’ purchasing power. According to the National Association of Realtors, home sales in 2024 fell 15% year over year.

Many homeowners unable to sell their properties have converted them to short- and mid-term rentals, further increasing market supply.

This additional supply will intensify competition in the short- and mid-term rental market. Owners need to attract guests by improving service quality and optimizing prices.

According to AirDNA’s analysis, the number of short- and mid-term rentals grew 20% over the past year, while bookings grew only 10%, indicating that the market is gradually moving toward oversupply.

2. Cautious consumer spending puts pressure on short- and mid-term rental demand

The Fed’s slower pace of rate cuts reflects a cautious view of the economic outlook.

In an uncertain economy, consumers are more likely to cut discretionary spending. According to the U.S. Travel Association, domestic travel spending in 2024 fell 8% year over year.

For short- and mid-term rentals, this means guests will focus more on value when choosing accommodation. Owners need to be more competitive in pricing and service, and could consider increasing longer-stay discounts to attract budget-conscious guests.

3. Trump and the Federal Reserve: Uncertainty over policy direction

During his previous term, Trump consistently called for sharp rate cuts and repeatedly pressured the Fed through public statements.

He believes the Fed’s cuts have been insufficient, holding back potential economic growth. However, his policy proposals, such as expansionary fiscal policy and trade protection measures, have also raised inflation expectations, making the Fed more cautious about cutting rates.

Trump’s pressure has not changed the Fed’s stance of slowing rate cuts.

At the press conference, Fed Chair Powell emphasized that future rate policy would depend more on economic data. This adds uncertainty about policy direction and further complicates expectations for short- and mid-term rentals.

4. The long-term impact of rate cuts on short- and mid-term rentals: Opportunities and challenges

Challenges:

More supply and greater competition: As more homes enter the short- and mid-term rental market, owners need to improve management to stay competitive.

Weak demand: Reduced consumer spending may lower occupancy, particularly during the tourism low season.

Opportunities:

Flexible rental pricing: Short- and mid-term rentals let owners adjust prices to market supply and demand more flexibly than long-term rentals.

Greater market differentiation: High-quality properties offering good value will be more attractive. Owners can increase their market appeal through differentiated operations.

5. How owners can respond

If your current long-term tenant wants to renew, try to agree, even without a rent increase.

Lower prices and expectations. Shift your focus from making money to surviving this downturn and holding on.

Lengthen stays. If a good mid-term rental opportunity arises, rent the home even if the rate is below your expectations, prioritizing stability through the low season.

Overall, a slower pace of rate cuts will lengthen the recovery in short- and mid-term rentals. Owners should temper their expectations and prioritize stability.

If you would like more practical short- and mid-term rental management advice or need a professional team to operate your property, please contact us!

If you:

Hope to increase rental income through short-term rentals;

Cannot spare a great deal of time to handle the small details;

Occasionally need to use the home yourself, making it unsuitable to empty out the furniture for a long-term rental;

Then:

Snowball Rentals’ management team is your best choice.

From pre-launch vacation-rental styling, big-data analysis and online marketing to tenant screening, dynamic pricing, customer service and sales, cleaning and repairs, Snowball Rentals provides everything as one complete service for your home.

This Week’s Booking Results

Through long-standing relationships with insurers, assignment companies and technology companies, Snowball Rentals rents homes for medium- and long-term durations at short-term rates, then gives owners a rebate of 5% in management fees to maximize their income.

As the weather gets cooler, Seattle’s short-term rental low season is approaching again.

Short-term rentals in peak season and mid-term rentals in low season: this is the new strategy we have repeatedly emphasized and tried this year! Some recent large bookings have been like a ray of sunshine. Homeowners, let us support one another and face the approaching low season with confidence.

The detached Renton home below can be found on Zillow, where its estimated long-term rent is approximately $3,751 per month.

With the owner’s trust and support, we carefully furnished the home and immediately began operating it as a short-term rental. Fortunately, its good condition and location have brought a steady stream of short- and mid-term bookings.

As shown in the booking screenshot below, a guest recently contacted us directly to rent this house from January 15 to June 19 next year, a total of 155 nights, at an

average monthly rent of approximately $8,867.6.

In summary, after Snowball Rentals began operating this property, its monthly rental income increased from $3,751 to $8,867.6, an increase of nearly 136%.

Securing such a large booking in low season is no easy feat!

As noted above, this 155-night booking runs from January 15 to June 19 next year. It not only covers two months of the short-term rental low season, September through March of the following year, but ends right in the peak season!

For homeowners, combining short- and mid-term rentals in this way can earn more in peak season and help them get through low season smoothly. Even if the low-season rental figures look less dramatic, they still outperform long-term rentals and give homeowners a strong sense of financial security.

More importantly, the owner does not have to worry about maintenance or cleaning. When something needs to be discussed with guests, we also help with communication and oversight.

Here, we again thank the owner for placing trust in the Snowball Rentals team!

After nearly two years of Airbnb’s downturn, we at Snowball Rentals hope to help owners make steady progress in low season, navigate the challenges safely and lay a better foundation for next year’s peak season.

Once again, heartfelt thanks to our homeowners for their trust and support. Whether the market is strong or weak, Snowball Rentals will stand with you and look for ways to increase your income!

Some homeowners will surely ask the hard question: was a large booking like this just a stroke of luck? What if the home does not rent? A long-term rental is more stable—even earning less is better than earning nothing!

Our answer is: the outcome depends on what we do.

Vacation-Rental Styling

Competition on Airbnb is becoming increasingly intense. The days of piecing together secondhand furniture, taking phone photos and earning easy money on Airbnb are over. Airbnb hosts have moved toward professional operations.

Careful design and furnishing before launch, followed by professional short-term rental operations, will be the only choice for a rental that continues to generate high income.

Here is another of Snowball Rentals’ core services: vacation-rental styling!

Before we furnished it, the detached home mentioned above looked like this:

After our careful furnishing, it looks like this:

When choosing a short-term rental on Airbnb, would this home’s appearance attract you?

If you would also like to make your home more attractive and earn more rent, please contact us at any time!

This Week’s Short Videos

We regularly update short videos every week.

The content you need is all here.

👇🏻 Homeowners are welcome to follow us 👇🏻

Snowball Rentals

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Snowball Rentals

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Snowball Rentals

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We also share practical vacation-rental styling plans and creative ideas to help you achieve more with less spending!

Keep rental income growing!

Xiao An’s Vacation-Rental Styling

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Visit vacation-rental stylist Xiao An’s website. We regularly share our latest home-furnishing insights and hope you find them useful!

Website: design.snowballrentals.com

Referral Rewards

If you are already a Snowball Rentals homeowner, you receive a US$500 referral fee for each referral.

If you are not yet a Snowball Rentals homeowner, you receive a US$250 shopping voucher for each referral.

Snowball Rentals Management

1. Full service — We provide pre-launch rental design, furniture procurement, furnishing, professional photography, online marketing, copywriting, tenant service and sales, cleaning, supply purchasing and property repairs. You only need to be a hands-off owner; we handle the rest.

2. Multi-platform promotion — We promote the home on Airbnb, VRBO, HomeAway and other mainstream platforms for maximum exposure.

3. Dynamic pricing — Using big data, we adjust prices every day according to seasonal demand, holidays, last-minute vacancy offers, weekends and local activities, maximizing the owner’s income.

4. Income-improvement SOP — We follow 44 secrets for maximizing short-term rental income, optimizing each property’s online marketing, on-site operations and other aspects to work toward maximum income.

5. Flexible owner stays — Owners can flexibly choose when to stay themselves. This is especially suitable for owners with multiple residences around the world.

6. Terminate at any time — Management does not require an annual commitment. The owner can end the agreement with one month’s advance notice.

7. Corporate housing — In addition to nightly rentals, we work with insurers and assignment companies to provide executives with hotel-style managed accommodation for stays longer than 30 days.

8. Transparent fees — For rentals longer than 30 days, we charge 15% of accommodation revenue. For nightly rentals under 30 days, we charge 20% of accommodation revenue.

Author’s tip: Personal views, for reference only.