The post-pandemic real estate surge in Galveston, Texas, is now experiencing a sharp reversal. Once a hotspot for buyers seeking income-producing vacation homes, the coastal city is seeing a significant increase in property listings as investors offload short-term rentals that have proven far less profitable than expected.
Galveston saw a spike in home purchases during the COVID-19 pandemic, driven by remote work flexibility and the appeal of beachside living. Many buyers also hoped to capitalize on the booming short-term rental market, enticed by social media claims of high returns with minimal effort. The number of registered short-term rentals more than doubled between 2021 and 2023, jumping from 2,300 to 4,900.
However, the expectations have not matched reality. Property owners are now discovering that short-term rentals require full-time attention, including ongoing maintenance, guest communication, cleaning, and compliance with local regulations. “It’s not free money,” said Stacey Weber-Rubio, a Galveston-based real estate agent. “It’s hard work. It’s a real job.”
Incidents involving poor rental conditions have also damaged the local short-term rental reputation. In one case, a group of teachers staying in a well-reviewed property encountered bugs, pet hair, moldy linens, and unclean bathrooms.
Their complaints to Airbnb were met with minimal assistance, highlighting the challenges both renters and owners face in managing guest satisfaction and platform accountability.
Market data confirms the shift. Galveston experienced a 26.7% increase in homes for sale between January and February 2025. The current housing inventory reflects an 18-month supply—far beyond the four to five months that indicate a balanced market. Prices have dropped accordingly. Zillow reports a 4.1% decline in average home prices, which now sit at $330,668.
Industry professionals say much of the inventory increase is driven by owners abandoning the vacation rental business. David Bowers, a local real estate agent, noted that many of these sellers are individuals who bought during the pandemic specifically for short-term rental income. “They’re souring on vacation rentals,” Bowers said.
Despite the downturn, some buyers see opportunity. With many homes hitting the market fully furnished and in prime locations, new entrants are hoping to improve on failed rental models.
“Lots of people are jumping into the market right now because they think they can build a better mouse trap,” Bowers added.
