The short-term rental market took off during the pandemic housing boom, but at what cost? – Sentinel of the Sun
Needing places to work temporarily or vacation while escaping pandemic restrictions, COVID refugees have made South Florida one of their top destinations.
And with them came an increased need for short-term housing or vacation rentals.
“It’s mostly showing up in the Sunbelt states, especially Florida, South Carolina, where we have waterfronts and parts of Texas,” said Ken H. Johnson, a real estate economist at Florida Atlantic University. “If you were going to work from home and you were up north or in the Midwest, and you wanted to get away from home or even work for a short time, you could do it from West Palm Beach or Miami.”
At the same time, investment in short-term rentals in South Florida took off as investors sought to take advantage of the boom in the real estate market, according to South Florida real estate agents.
It’s a great way for landlords to earn some extra cash, but how does the proliferation of short-term rentals affect a community?
Agents have witnessed the trend and reported an increase in people looking to buy these investment properties.
“A lot of people have come into the AirBnB marketplace,” said Benjamin Gene, president of Keyes Property Management in Pompano Beach. “They saw the market and they saw they could make almost three times the income from a vacation rental. They also saw the demand from a hotel because people were scared [of public spaces.]”
According to Gene, they have seen an approximately 200% increase in their vacation rental portfolio during the pandemic.
Shannon Nowden of the Nowden Group in Fort Lauderdale has seen a similar trend over the past three years as interest in acquiring such properties has only increased. In 2019, he said around 10% of his clients were interested in buying a short-term rental property, while in 2020 that number rose to 25%. In 2021, 60% of its customers were looking to enter the market.
Investors in these properties are a mixed bunch: some are international buyers, some are people who were typically in the single-family rental market and were trying to break into the vacation rental space after seeing how bad it was. was profitable, and some are families who own a second home and want it to bring in money when they’re not using it, agents said.
“Most of these buyers we see are from out of state. They are usually sophisticated investors who have experience in other investments like cryptocurrency and also want to enter the real estate market,” said Brian Peal of the Pearl Antonacci Group in Boca Raton.
Recently, the market has started to change as interest rates and house prices have both increased.
“We’re still adding new investors every month, it’s low season but we’re seeing people hesitating a bit more because profitability isn’t where it was a year or two ago,” Gene said. , adding that while the market might be in a small flux, that won’t take away from its longevity.
Some cities are more conducive to short-term vacation rentals than others, with Fort Lauderdale being a big draw due to its bustling downtown area and beach access. Delray Beach is similar, with its proximity to the beach.
Properties range from condos to out-of-town single-family homes to large waterfront mansions.
Some real estate agents have even made a specialty of short-term rental houses. The Nowden Group teaches short-term rental owners the ins and outs of the business, how to maintain their property and also serves as the property management company for these units.
One of Nowden’s selling points for potential buyers is that there’s a steady stream of customers – South Florida is a vacation wonderland, and a short-term rental offers a good option for families. who wish to travel and not have to rent several hotel rooms to accommodate them. , which brings purchases and expenses to the local economy.
While the trend may be a boon for some, various Broward neighborhood associations are unhappy with the rise in short-term vacation rentals in their communities, as they say the influx of such properties is causing a host of problems. .
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Ric Buchanan, president of the Coral Ridge Isles Civic Association, said that in the past six months, in one quadrant of the Coral Ridge Isles neighborhood, three properties listed on AirBnB have popped up, and with them a host of problems: large parties violating noise ordinance and improper parking on side of streets.
“I’m afraid it’s going to be difficult for the average homeowner to buy something,” Buchanan said. “It’s going to make it difficult for long-term residents to want to stay because their community is eroding.”
Hollywood Lakes Civic Association President Terry Cantrell said 30% of homes in their neighborhood are owned by an LLC, a problem that’s only been growing over the years.
“It’s a total disruption of a quiet neighborhood,” Cantrell said. “Nobody wants to live next to a commercial operation. When we bought our homes here in Hollywood Lakes, we were buying in a purely residential neighborhood.
AirBnB, for its part, states on its website that guests who are flagged for “hosting a disruptive party or violating our rules on gatherings of more than 16 people are subject to suspension or removal from the platform. ‘Airbnb’.
Another concern is that while South Florida is suffering from a housing shortage, these properties – potential places for people to live full-time – are now essentially part of the hospitality industry. This could bring new customers to local shops and restaurants, but it could exacerbate the housing shortage.
“There’s no one living there year-round, so this unit is effectively off the market when we need it,” Johnson said.