Mortgage rates went back to 7%. What that does to rental supply.
Two Nashville numbers landed in the same week this month and they tell opposite stories.
Nashville International Airport moved a record 24.5 million passengers in 2024. In the same stretch, the 30-year fixed mortgage average pushed back up to 7.04% (Nashville Post, January 2025).
Record visitors. Expensive money. If you already own a Nashville short-term rental, that combination is more favorable to you than the mortgage headline suggests.
Why expensive money is not all bad news for existing owners
Here is the mechanism. Short-term rental supply is built with debt. When the 30-year sits near 7%, the arithmetic on buying a house specifically to rent it nightly gets hard. The payment goes up, the required nightly rate to cover it goes up, and the number of properties that pencil goes down.
So new supply slows. Meanwhile the demand side — the people arriving through that airport — keeps growing. Slows is the operative word: Nashville's listing count kept climbing right through the last stretch of 7% rates, because most of that growth comes from zoning categories the permit freeze does not touch.
Owners who bought in 2020 and 2021 at three-point-something percent are sitting on an asset that is now genuinely difficult to reproduce. Not impossible, but difficult enough that the flood of new competing listings that showed up in 2021 and 2022 arrives more slowly now. Every quarter rates stay high is a quarter your competitive set does not grow much. I made the same argument when rates first pushed into the sevens in the fall of 2023, and it has held up.
The flip side, and I will say it plainly: high rates also make it harder for you to buy the second one. And they soften resale values, because your buyer faces the same payment you would. If your plan was to sell in the next eighteen months, that plan is more expensive than it was.
What high rates do to the market's behavior
A few second-order effects I have watched play out:
More owners hold instead of sell. Anyone with a 3% mortgage is not moving. That locks a lot of housing in place and it keeps some homes in nightly rental that might otherwise have turned over.
More owners get serious about performance. When you cannot buy your way to a better return, you have to operate your way to one. This is exactly the environment where the gap between an actively managed home and a passively managed home widens.
More owners try self-managing to save the fee. Understandable, and sometimes right, and worth doing with a real number in front of you for what management actually costs. But if dropping a management fee costs you a review average, it is the most expensive savings in the business.
Which brings me to the January job.
The Boost part: January is when we fix reviews
Here is this month's operating detail. January is the softest month on a Nashville calendar, and softness is a resource. We spend it on review repair.
The process is not complicated:
Read all of last year's reviews for each home, in one sitting. Not the star rating — the words. Ratings tell you there is a problem. Words tell you what it is.
Find the repeats. One guest mentioning the shower pressure is a guest. Four guests mentioning it over twelve months is a work order. In practice every home has two or three recurring themes, and they are rarely the thing the owner worries about. It is usually the mattress, the wifi, the parking instructions, or the check-in message being unclear.
Fix the top two in January, not in June. A repair in a soft month costs you a cheap night. The same repair in June costs you a peak weekend.
Respond to the reviews that need it. A calm, specific public response to a critical review — what happened, what changed — is read by the next twenty guests deciding whether to book.
Then watch the four-star reviews specifically. On this platform a four-star review is a complaint. Guests who had a genuinely good stay leave five. The four-stars are where your fixable problems live, and most owners only read the ones and twos.
Do that every January and a home's rating drifts up over years instead of down. Skip it and you find out in July, when it costs the most to fix.
What to do this week
If you self-manage: block two hours, read every review your home got in 2024, write down the repeated words, and pick the two you will fix before March.
If somebody manages your home: ask them what your recurring review themes were last year and what they are doing about them. If the answer is a star rating rather than a list of themes, nobody has read your reviews.
And if you are looking at 7% rates and wondering whether the home you already own is earning what it should before you think about a second one, get a revenue estimate from Boost Rentals. I will look at the listing, the reviews, and the comp set and tell you where the money is actually leaking. Straight answer, no obligation.
— Chris Hetzner, Boost Rentals