S. Fla. demand for short-term rentals entices more RE investors to offer them, but, according to an FAU report, that helped pushed rents higher for year-round residents.
MIAMI – South Florida renters can partly blame high home rents on the popularity of short-term rentals in the region, according to a new report from a Florida Atlantic University (FAU) housing expert.
Apartments, townhouses, condominiums and single-family houses rented for less than six months reduce housing inventory for locals looking to rent for a year or more in Miami-Dade, Broward and Palm Beach counties, according to the latest monthly rent index by Ken H. Johnson, a finance professor at FAU specializing in real estate. Johnson based his conclusion on anecdotal evidence from conversations with about 200 real estate agents, tenants and developers in 2022, plus rental data from Zillow, a national online real-estate marketplace.
What’s the solution then in one of the country’s top markets for arranging short-term rentals via Airbnb and Vrbo digital platforms, and one where property owners earn the most money by consistently using those platforms to rent their condos and apartments for weekend, weekly or monthly stays?
Miami is one of the most expensive Airbnb markets in the world: The average monthly price of a short-term rental in the city is $8,024, according to a study released in March 2022 by Compare the Market, making it the third most profitable Airbnb market globally for hosts, after Las Vegas and Honolulu. In 2021, Miami Airbnbs hosted 710,000 guests and earned a collective $200 million for the hosts, Airbnb said at the time.
An Airbnb North American spokesperson told the Miami Herald last March the company has seen bookings for long-term stays of 28 days or more via the online platform skyrocket in cities like Miami since the pandemic emerged. The spokesperson attributed Miami’s allure to year-round sunshine, bevy of outdoor activities and lax COVID-19 rules that drove remote workers here to live and work.
Johnson said homeowners should opt for seeking long-term lease deals for the sake of the regional housing market and their individual bottom lines. In this economy where more renters this year are expected to opt for roommates or move back home with parents because they can’t afford rental costs by themselves, Johnson said, landlords would have less risk with a single steady renter for a year or more.
“With a looming recession,” Johnson said, “demand might not be what it used to be (for short-term rentals), but there will be demand for long-term rentals. The potential (economic) instability is encouraging us to go away from short-term rentals, because less people will be working remotely and taking a vacation.”
For their part, officials at Airbnb and Vrbo declined multiple requests from the Herald to comment or provide information for this story.
Miami Beach does not allow for Airbnbs in most residential areas and used to have some of the steepest fines in the country for illegal Airbnbs, with perpetrators facing between $20,000 and $100,000 fines. The city sharply reduced those fines after Airbnb sued in 2018.
Johnson’s finding aligns with some national studies, said Dr. Tingyu Zhou, Dean Gatzlaff Associate Professor of Real Estate in Florida State University’s real estate department. Zhou said policymakers can step in by levying taxes on those who rent their homes for less than a year.
The pace of rent increases is expected to slow in Miami-Dade County. It’s welcome news to renters living in the ‘most competitive’ rental market in the country in 2022, according to a recent survey by RentCafe. Still, home rents are unaffordable for many South Florida households without becoming cost burdened, meaning they are forced to spend more than a third of their monthly income on housing.
Through the ongoing pandemic that began in March 2020, rent increases in Miami-Dade forced out many essential workers who could no longer afford to live here. Miami-Dade County responded last spring by declaring a state of emergency due to housing, and county Mayor Daniella Levine Cava led county officials in allocating tens of millions of dollars for rental assistance for households most in need.
Local policymakers, real estate experts and developers continue discussing potential long-term solutions for Miami-Dade’s housing affordability crunch. All agree more supply is needed in the community, especially affordable and workforce housing.
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