This article accurately predicted that Florida would become a Corona Virus hot spot while explaining the effect on the Florida Vacation Rental market. This article was originally posted on April 19th, and revised on 6-19-2020.
Ron DeSantis and the Coronavirus have had quite an effect on Florida Vacation Rental Income. The Governors ban has been extended through April 30th. The original March 27th order was based on the Governors rational that “many cases of COVID-19 in Florida resulted from individuals coming into the state of Florida from international travel and other states, posing great risk to Florida residents”. Desantis thought short term vacation rentals would enable behaviors that run contrary to social distancing efforts.
Vacation rentals and third-party platforms advertising vacation rentals in Florida present attractive lodging destinations for individuals coming into Florida – Gov. Ron Desantis
What a difference 2 weeks makes! Florida was one of the last states to impose a 30-day statewide stay at home order. Now Desantis is leading all Governors by taking a huge first step by reopening some Florida beaches this weekend.
The Governor took a lot of heat for his slow response to the COVID-19 pandemic. “Coronavirus is killing us in Florida,” was the headline of a Miami Herald editorial that blasted DeSantis’ response. “Act like you give a damn.”
Whether the Vacation Rental Ban is extended again or not it is going to be difficult to generate short term rental revenue. Moreover, difficult for to pay the mortgage on their vacation rental. If you advertise on Air B-n-B (Air Bed and Breakfast) and/or VRBO’s (Vacation Rentals By Owner) there are three issues that will surely prevent you from generating rental revenue over the next 6 months.
Coronavirus Outbreak Is Worse Than You Think in Florida
I generally like to keep editorial opinions out of my statistical analysis. However, this is one time where opinion and data can’t help but to collide. In defense of Florida, Americans in general are not being tested
for Coronavirus / COVID-19. Only 1.2% of US population has been analyzed for the disease since the pandemic began. You can’t detect a virus you can’t see and isolate people from others who don’t know. Simply put, Florida is under testing its residents.
Florida’s population is uniquely made up of those groups that are more susceptible to the Coronavirus. Florida has the highest percentage of elderly residents in the nation. The Sunshine State also claims a high percentage of residents who carry a myriad of underlying health issues. These include: those who are obese, have heart disease, diabetes or live in nursing homes.
Until recently the Florida Health Department would not even report cases and deaths in long term care facilities. One example of under testing is in Sumter County near Ocala Florida. This county has the highest median age (67.8) in the United States. The reason: The Villages is the world’s largest over-55 community (over 132,000 residents) and the most rapidly expanding metro area in the United States. Sumter County has only tested 1,525 of those residents. That’s one percent of an older very susceptible population.
Large metro areas like Orlando, Jacksonville, Tampa and West Palm Beach all have populations over 1M people and yet averages less than 16,000 total tests. Prediction: Florida will be the one of the next Coronavirus hot spots in America. Not because of any uptick but more so because the state will be forced to release their real numbers. This will not benefit Florida tourism.
The Effect of Temporary Bans and Airlines on Short Term Rentals
Orlando Florida is the most traveled city in the world with an estimated 75 million visitors each year. However, the entire State of Florida is built of tourism. In the most recent statistics, a record 126.1M visitors traveled to Florida. Over 93M of those visitors traveled as airline passengers. European and Canadian travelers make up a large number of the 15M overseas travelers to Florida. Currently China and 26 European Countries from the Schengen Area are temporarily banned from traveling to the US. Even if you believe that the Coronavirus will be under control sometime soon, do you think the customers that are likely to rent your home will travel by air? I don’t think so. Maybe they can take a cruise ship????
Disposable Income for Vacationers
The mouse is not happy these days. Disney World stock was downgraded on Monday as speculators believe the park may not open until the beginning of 2021. Major them parks such as Universal Studios, Bush Gardens, Sea World, Legoland, Epcot have no reopening dates set.
Disney, the world’s biggest entertainment company—owner of movie studios, theme parks and sports networks—will stop paying more than 100,000 employees this week
22 million Americans are out of work in the last month and unemployment is nearing 18%. My question to a vacation rental owner is “who has the money to rent a vacation home.” In this economy, I don’t think it’s a huge leap of faith to predict a pull back in vacation travel due to income. I lived in Orlando the majority of my life. I also owned a vacation rental 6 miles from the Magic Kingdom. I know how hard it is to book enough rental weeks every year to cover annual expenses. I can’t imagine how hard it will be now. Prior to the Coronavirus outbreak, the Federal Reserve completed a Survey of Household Economics and Decision making. They found that some, “40% of Americans would struggle to come up with even $400 to pay for an unexpected bill.” It seems discretionary income will be non-existent. Americans will have to be more frugal with monies they normally spend on leisure activities.
Time will tell if Desantis decision to reopen the state was worth the risk. The impact of the ban is already being felt and the effects to rental income will be massive.
Want to discuss long term rental or sales options for your Vacation Rental Property? Please contact our office at Keith Jackson, Licensed Real Estate Broker and residential Appraiser. 321-662-0422 KJ@EurekaFlorida.com.
Keith Jackson is a Licensed Real Estate Broker and Residential Appraiser. He is a Debt Settlement Specialists with over 10 years and 10,000 hours of experience in distress sale negotiations.