Why Are Short Term Rental Owners Quitting Airbnb in 2025?

By Kandie Frederick

Growing up on the central coast, Kandie is a third generation family in the North County and a second generation family in real estate. Joining Country Real Estate in 2000, and graduating from Cal Poly in San Luis Obispo, she brings a background of Agricultural Business to combine with her knowledge of the local real estate market. Working with her family and their decades of local real estate development, she is deeply connected to the roots of our community and its growth.

Why are short-term rental owners quitting Airbnb in 2025? If you’ve noticed fewer Airbnb listings, or if you’re a host feeling burnt out, unfortunately, you’re not just imagining things.

There’s been a noticeable shift in the short-term rental world in 2025. More and more owners are stepping away from platforms like Airbnb and VRBO, citing everything from falling income to frustrating new policies. As someone in the business, this is certainly alarming.

But what exactly is driving this mass exit? Let’s break it down.

1. The profit margins are shrinking. At one point, Airbnb felt like a cash machine. But today, hosts are making less while still putting in more work to maintain their rentals. In many major markets, the number of short-term rentals has skyrocketed, while guest demand hasn’t kept pace. The result is lower occupancy, more aggressive price competition, and much tighter profit margins.

On top of that, costs are climbing. Property taxes are higher, platform fees continue to rise, and cleaning services, insurance premiums, and other operating expenses are eating away at revenue. For many, the “passive income” pitch no longer feels passive or profitable.

2. Regulations are cracking down. Across the U.S., cities have tightened restrictions on short-term rentals. Many now require permits, limit the number of nights you can host, or even ban STRs in certain residential zones. With that, fines are increasing, enforcement is stricter, and compliance often comes with significant costs.

For some hosts, the legal headaches aren’t worth the effort. This leads them to either sell their properties or switch to long-term tenants.

3. Guests want hotel-level service. Today’s travelers expect more than ever before, like sleek furnishings, lightning-fast Wi-Fi, spotless interiors, flexible check-ins, and near-instant communication.

Meeting these expectations often requires 24/7 availability, professional management tools, and sometimes even dedicated staff. For part-time hosts managing just a few properties, keeping up with this level of service can be exhausting. Without additional support or automation, the workload can quickly lead to burnout.

4. Airbnb’s new payment reversal policy. One of the more controversial changes in 2025 has been Airbnb’s updated payment policy. The platform now allows payouts to be reversed after a guest checks out, even if no formal complaint or dispute was filed. Funds can be pulled back weeks later with minimal explanation. In most cases, these complaints are often based on vague or hard-to-verify issues.

For hosts working on slim margins, these surprise deductions can cause serious financial strain. The lack of transparency and limited ability to appeal have made some hosts reconsider how much they want to rely on Airbnb for their income.

5. Some hosts are making the switch or selling. Faced with these challenges, more owners are rethinking their business model. Some are moving their properties into the long-term rental market for more predictable income, while others are partnering with professional property managers to reduce the stress of day-to-day operations.

Then, there are owners cashing out entirely, taking advantage of still-strong property values before the market shifts further.

Short-term rentals aren’t disappearing, but the market is changing fast. The days of easy profits and hands-off hosting are largely behind us. If you’re struggling to keep your STR profitable, now is the time to take a hard look at your options.

Ask yourself: Can you raise rates without losing bookings? Are you fully in compliance with local laws? Is it time to bring in professional management, or even exit the market altogether?

Whatever you decide, you don’t have to figure it out alone. I can help you review your numbers, evaluate your options, and build a more effective rental strategy in 2025. Call or text me at (805) 878-2225 or email me at kandie@countryrealestate.com. Let’s work this out together.