Florida has always been a popular destination for Americans coming from other states, especially retirees, in search of a pleasant climate, beautiful beaches and a better quality of life. However, there are not so many residential properties available to meet this demand. Online rental platforms such as Airbnb contribute to the housing crisis as they encourage landlords to allocate properties for short-term rentals rather than residential purposes. What is a problem for some is an opportunity for others. The expected return on rent in Florida has become one of the highest in the world, fueling the desire of investors to buy real estate in the region.
The impact of the pandemic on the short-term market (short-term rent)
The short-term rental trend has been gaining momentum globally for a long time. The demand for accommodation in tourist destinations encourages the practice of this type of practice, to the detriment of long-term rentals.
Some tourist destinations, however, are more visited. In these markets, the trend acquired more movement with the arrival of the pandemic. This is the case of cities like Miami and Orlando.
But why has the pandemic encouraged the practice of short-term rentals in Florida?
With the lockdown policies implemented in the USA, many Americans, especially from the northern regions of the country, decided to spend the confinement period in Florida. The pandemic actually precipitated a movement that had been going on for decades. After all, why not work remotely from a city with beautiful beaches and pleasant weather all year round?
The implementation of remote work facilitated this decision. Hundreds of thousands of Americans decided to spend long periods of time in Florida, working remotely, until they realized they could do that for the rest of their lives. That’s when there was a surge of Americans pouring into Florida to establish permanent residency.
Florida, in the most critical period of the pandemic, received more than 1000 new residents every day. It turns out that the real estate market did not have inventory to meet all this absurd demand. The real estate crisis was further aggravated by the fact that most of the property owners who had put their properties up for sale before the pandemic decided to take the property off the market when the pandemic arrived, fearing the uncertain future.
Very high demand and low inventory could have no other consequence than the explosion of residential property prices.
Where to live then? One solution in this period of crisis, for those coming from another state, was to spend time in properties on Airbnb or another platform. The demand for seasons longer than 20 days on online rental platforms has grown significantly.
Airbnb-focused homeowners have begun to see extraordinary return on rent. Even with the pandemic already over, the demand remains.
Crisis in the housing system
With more and more landlords turning their properties over to Airbnb, the available inventory for those looking to buy a home to establish housing is dwindling. This creates a housing crisis. The few properties intended for long-term rental charge very high monthly values.
A recent study released by Florida Atlantic University reveals that the crisis in the real estate market in Florida is being increasingly aggravated by the advance of online platforms.
Opportunity for investors
What for some can be interpreted as a housing crisis, for others is a unique investment opportunity in one of the most desired destinations in the world.
Florida offers one of the highest returns on investment in real estate. Recently, the city of Miami was classified as the second market in the world with the highest expectation of return in the luxury segment for 2023.
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.
It’s not hard to understand why investing in Florida real estate is one of the best investments overall.
See in this article the main condos in Miami to invest in Airbnb
About AMG International Realty
AMG International Realty is a global real estate agency specialized in Florida. If you want to know more about investing in Airbnb properties in Orlando or Miami, contact me right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).