Short-term rentals on online platforms such as Airbnb could be exacerbating Florida’s already critical housing market. This is what defends a recent study released by Florida Atlantic University. According to the analyses, a considerable amount of properties that could be offered for housing purposes, that is, long-term rentals, are being targeted at tourists, through short-term accommodation.
Ken H. Johnson, Ph.D., an economist at the FAU Business School, warns of over-deployment of real estate for tourist purposes, diminishing the stock of housing-oriented properties. “It’s the shortage of available units that drives up rental rates,” Johnson said. “While builders and local authorities clearly need to build more units, this is not the only solution to this problem.”, he adds.
It is worth remembering that Florida’s home inventory has reached its lowest historical level in the last two years, creating a strong imbalance between demand and supply.
Despite the recent downturn in real estate across the US, driven primarily by rising interest rates in the US, rent prices remain high in Florida, which is home to 9 of the 21 most expensive markets in the country, according to a report by Waller, Weeks and Johnson Rental Index.
The FAU study was the basis for an article in the Miami Herald, calling attention to the role of online rental platforms. Most companies questioned the methodology used in the FAU studies, others did not respond to the newspaper.
So far, the market in Florida remains unbalanced in what the sector calls a “seller market”, that is, favorable to landlords. At the height of the crisis, the main centers of Florida (Miami and Orlando) faced an extreme situation, called the “Bidding War”. The same house could receive up to 6 “cash” proposals (cash payment) at the same time.
Florida is one of the most profitable Airbnb markets in the world
What for some can be a problem, for others is a great opportunity. Owners perceive a higher expected return on short-term rentals than on long-term leases. Miami and Orlando are two of the most expensive Airbnb markets in the world.
Attention to legislation
It is important to note, however, that not all properties and zoning permit the practice of short-term rentals in Florida. Each city has a different rule.
The Orlando region, for example, has well-defined zoning where the practice is welcome. This is the case, for example, of Kissimmee, a city neighboring Orlando and already well known to tourists. Kissimmee is home to some of the most sought-after Vacation Homes. A great advantage of the city is that it is home to the Disney parks and, therefore, staying there is very practical for tourists.
In the city of Miami it is different. To find out if the condominium allows the practice of short-term rentals, it is necessary to check the status of the condominium.
Miami has always been a city with stricter rules for vacation rentals. Miami Beach does not allow Airbnbs in most residential areas and charges steeper fines to anyone who breaks the law. The fines were reduced, however, following a lawsuit filed by Airbnb in 2018.
However, the trend is very strong and Miami could not be left out of this market. In this context, the central region of Miami is making the rules more flexible, with several launches of condominiums aimed at the practice of short-term-rental in the Downtown region.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. If you want to know more about investment opportunities in Florida, get in touch right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).