Introduction
Fredericksburg, Texas, is a charming and picturesque town known for its rich German heritage, beautiful landscapes, and vibrant culture.
With a thriving short-term rental market, it has become a popular destination for tourists looking for a unique getaway experience.
In this guide, we will dive into the world of Airbnb and short-term rentals in Fredericksburg, examining key statistics, market trends, and providing insights for potential investors and travelers.
Market Overview
To understand the dynamics of the short-term rental market in Pigeon Forge, let’s delve into some key statistics and figures.
Supply
AS of October 2024, the most popular homes are 1-bedroom homes, comprising 26.36% of inventory. This is followed by 3 and 2-bedroom homes at 20.60% and 20.32% of the total inventory, respectively.
Homes Appreciation
As of October 2024, according to Zillow, homes in Fredericksburg experienced an apppreciation of 5.16. This data indicates a significant decrease in property values.
Median Home Value
As of November of 2024, Homes in Pigeon Forge have appreciated by 5.16%. The median home value in Pigeon Forge is $547.2K as reported by Zillow. This figure highlights the city’s robust real estate market and the potential for long-term property appreciation.
Active Short Term Rentals
As of October 2024, Fredericksburg boasts a significant Airbnb rental market, with approximately 1,469 active rentals. This abundance of available properties provides ample opportunities for investors and homeowners looking to capitalize on the tourism demand.
Average Daily Rate
The median ADR for the market is $297. The Average Daily Rate is the highest for 5-bedroom homes $457, followed by 4-bedrooms and 3 bedrooms at $291 and $316 respectively.
Occupancy Rate
Chalet data reveals an occupancy rate of 47.95% for Airbnb rentals in Fredericksburg. This high demand ensures a consistent stream of income for property owners and investors.
How Profitable is Airbnb in Fredericksburg ?
As of October 2024, the average gross yield, which represents the annual income generated by a property as a percentage of its value, is 8.85% in Fredericksburg. This figure suggests that short-term rentals in the city offer a favorable return on investment. Fredericksburg is ranked #65 by return on investment on Airbnb rentals in the United States.
Annual Revenue
According to Chalet, short-term rentals in Fredericksburg earn an average of $34,340 annually, highlighting the strong investment potential in the city’s market. You can evaluate your properties using our free Airbnb calculator.
Top Places for Airbnb in Fredericksburg
Fredericksburg’s top submarkets for Airbnb investments include areas like ZIP code 17026, which has the highest gross yield at 15% and an annual revenue of $48,575. In contrast, ZIP code 78624 offers more extensive opportunities with 3,056 full-time listings, but a lower gross yield of 7%.
Home values also vary significantly, with properties ranging from $184K in 50630 to $1542K in 78624, making each submarket unique in terms of investment potential and entry cost.
Hosts
The market is dominated by property management firms. The largest host is Absolute Charm with 4.91% of the total inventory and an average review of 4.77⭐️s .
Property Tax
According to SmartAsset, the average property tax in Fredericksburg is 1.14%. This relatively moderate tax rate is an important consideration for those looking to invest in short-term rental properties.
Guests
The majority of the guests in Fredericksburg come from Texas and are within driving distance. 13.00% of all guests are from Houston followed by Austin with 12.90%.
Regulations
Fredericksburg’s short-term rental regulations are somewhat investor-friendly, with different zoning regulations and limitations in place. Understanding these regulations is crucial for potential investors to ensure compliance and a smooth operation.
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Understanding the Local Context
To make informed decisions about investing in the short-term rental market in Fredericksburg, it’s crucial to understand the local context:
- Median Household Income: The median household income in Fredericksburg, TX, is an essential factor to consider when targeting potential guests.
- Climate: Fredericksburg enjoys a pleasant climate, characterized by warm summers and mild winters, making it an attractive year-round destination.
- Population Size: Knowing the population size of the town helps gauge the potential customer base for short-term rentals.
- Sports Teams and Colleges: Fredericksburg is a small town and may not have major sports teams or colleges.
Tourism in Fredericksburg
Understanding the tourism landscape is crucial for anyone interested in the short-term rental market:
- Visitor Demographics: Knowing where visitors are coming from can help tailor your rental property to their preferences.
- Total Number of Visitors: Fredericksburg attracts a substantial number of visitors each year, contributing to the demand for short-term accommodations.
- Tourist Attractions: Some of the biggest tourist attractions in Fredericksburg include the National Museum of the Pacific War, Enchanted Rock State Natural Area, and a thriving wine country.
- Peak Season: The peak tourist season in Fredericksburg typically falls during spring and early summer when the weather is most inviting.
Crime Rate
Safety is a significant concern for both property owners and travelers. Fredericksburg is generally considered a safe destination, but it’s always wise to check the current crime rate for your peace of mind.
Conclusion
Fredericksburg, Texas, offers a promising landscape for short-term rental investors. With a strong demand for accommodations, attractive annual revenue figures, and a rich cultural backdrop, it’s an enticing destination for both property owners and travelers. However, thorough research and understanding of the local context are crucial to make the most of this burgeoning market. Whether you’re looking to invest in short-term rentals or planning a visit, Fredericksburg’s unique charm is sure to leave a lasting impression.
