What if the Airbnb arbitrage trade collapses?
STR oversupply plus city crackdowns crater Airbnb yields and force leveraged hosts into distressed sales — a localized, slow credit-quality drag on small-balance investor mortgages, so the muted cascade fits. Rhymes with NYC's 2023 Local Law 18 and the 2020 COVID travel-demand collapse that briefly wiped STR cash flow. Transmission is into regional non-bank and community-bank mortgage books. Forward angle: 'Airbnbust' supply is concentrated in a few metros, so the contagion is a sentiment/comps effect rather than a macro credit event. Roots reasonable.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Oversupply and city crackdowns crater short-term-rental yields, forcing leveraged Airbnb hosts into distressed sales. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Recession signal ▲ — which propagate through our causal graph to the markets below.