Vacation Rentals Are Worsening Florida’s Housing Crisis, Study Finds | Business
Thousands of short-term vacation rentals could be contributing to the rental crisis in South Florida, where it has become harder to find affordable homes, according to a new study.
Short-term vacation rentals could prevent units from entering the market that could instead be used as longer-term rentals at a time when many areas of Florida are grappling with rising rents and a serious shortage of affordable housing, according to the Florida study. suggests Atlantic University.
“They’re taking properties off the market that could be used as longer-term rentals,” said Ken H. Johnson, a real estate economist at Florida Atlantic University. “It’s the shortage of available units that’s driving up rental rates. While developers and local governments clearly need to build more units, that’s not the only solution to this problem.”
To conduct the study, Johnson used anecdotal evidence based on discussions with area realtors, developers, landlords and brokers to see what issues are contributing to South Florida’s housing crisis. ne of the problems that kept coming back was short term. vacation rentals and condo and homeowner association restrictions.
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South Florida’s affordability crisis has been brewing for years, due to a combination of various factors such as low supply, lack of available land to build on, and arduous zoning and permitting processes.
And the pandemic real estate boom, where wealthy out-of-state buyers and renters flocked to South Florida, drove intense demand in an area that was already facing a tight supply of units.
Combined with limited land on which to build and the lengthy process of getting new units on the market, from zoning and permits to block financing, this has created a crisis that has made South Florida one of the most expensive to rent relative to income.
And while short-term vacation rentals won’t solve the problem, it could potentially contribute to the severe shortage of homes available for rent in South Florida, according to the study.
The FAU study did not name any particular site. Some other studies have indicated that the presence of companies such as Airbnb can affect a community’s rent and affordable housing supply. A study published in the Harvard Law and Policy Review looked at the city of Los Angeles and found that converting a unit previously used by a resident to an Airbnb took the unit out of the rental market, resulting in a ” real, but probably slight, increase in rents. »
Airbnb and Vrbo have previously said their companies bring much-needed revenue to the cities they’re in, providing jobs and tax revenue and often helping residents and vacation home owners afford the homes they want. own and that converting these units would not increase the supply by much.
“Census data indicates that the share of homes used as vacation rentals has remained constant since 2010, yet the cost of housing is rising everywhere, for everyone because the country simply hasn’t built enough The need to prioritize the construction of new homes is an issue in communities large and small across the country,” Airbnb said in a statement sent to the South Florida Sun Sentinel.
It is difficult to put an exact figure on the number of short-term vacation rental units in Florida. The 2021 American Community Survey suggests that up to 830,000 people in Florida fall under the “vacation rentals” category, or about 8% of housing in Florida. Johnson estimates there could be 9,000 to 10,000 short-term vacation rental units in the tri-county area that are being held off the market. “If we put those 10,000 units back on the market, it wouldn’t get us back to where we should be. [in terms of pricing]but it would help bring the rents down a bit,” he said.
And more units will need to be built overall to account for the lack of available places to rent. According to figures from the Florida Apartment Association, based on projected population growth, housing demand and supply, the South Florida region will have a housing deficit of 263,000 units.
“There are a lot of units on the drawing board now, and maybe we can do a lot to catch up, but we have to build and we have to build a lot,” Johnson said.
As rents have started to drop across the state and in South Florida, many tenants are still paying a premium based on where rents should be, according to the Waller, Weeks and Johnson Rental Index .
In the Tri-County area, rents are down about -0.14% month-over-month, but renters are still paying an average of about 14% more than rents should be. The current rent for an average home in South Florida is around $2,770, while long-term trends show rent should be around $2,416.
And in other places in the state, it’s similar. In the Cape Coral-Fort Myers metro area, renters are paying just over 17% above what rents should be and in Orlando, renters are paying about 8% more than price trends suggest. long-term.
With the possibility of an economic downturn looming, owners of short-term rentals may also find it more lucrative to convert to longer-term rentals, Johnson noted.
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