Florida's rental market is causing so much pain to everyday workers that it might stifle the state's economic growth. At least that's the takeaway from a new study from Ken Johnson, an economist at Florida Atlantic University's College of Business.
According to Johnson, there are too many vacation rentals in the Sunshine State. These short-term rentals — oftentimes listed on sites like Airbnb and Vrbo — are removing apartments and homes that could otherwise be filled by workers that need to live near their jobs.
Additionally, Johnson describes the regulations some homeowners and condominium associations as "oppressive" because they limit when homeowners can begin renting their units, which only puts further pain on renters' wallets.
It's this particular combination of strict HOA rules and the sheer number of vacation rentals is a mixture that is affecting housing affordability negatively, he said.
"Both of these take away units that could be rented to the public, and it's the shortage of available units that drives rental rates higher," Johnson wrote in the study.
Florida became a hot destination for many during the pandemic as remote workers became untethered from their desks and had the freedom to chose living in warmer places. In all, the state's population grew by 1.9% between June 2021 and June 2022, the most of any state for that period, census data shows.
The droves of people moving to Florida is just one reason why the rise in rents across the state has outpaced the national average for the past three years. According to Johnson's study, Florida is now home to 9 of the 21 most overpriced rental markets in the US.
For example, Johnson estimates that renters in the Cape Coral-Fort Myers area are paying a 18% premium for their homes when compared to long-term trends, according to FAU's Waller, Weeks, and Johnson Rental Index. The index is weighted to capture the historical rent trends in a given area rather than computing the average rents of homes that are currently available.
Currently, the average rent in Cape Coral is above $2,200 per month while the Waller, Weeks, and Johnson Rental Index estimates that a fair market value is closer to $1,880 per month.
The number of vacation rentals in the state is only making it harder for people to find affordable places to rent, the study suggests. For example, Panama City Beach, a popular coastal vacation community, has more than 11,800 vacation rentals listed on Airbnb and Vrbo at an average cost of $265 per night, AirDNA data shows. That's compared to the city's total housing stock of nearly 17,000 units, as counted by Point2Homes.
"In Florida, US Census data indicates the share of housing units used as vacation rentals has remained constant since 2010, and yet the cost of housing is up everywhere, for everyone because the country simply has not built enough housing," a spokesperson for Airbnb said to Insider over email. "The need to prioritize building new housing is an issue in communities large and small across the country, and Airbnb is committed to working with local officials on efforts to support housing solutions and Florida's vacation rental industry which continues to provide economic opportunity throughout the Sunshine State."
However, in many instances, it is more lucrative for homeowners to list their properties on short-term rental websites like Airbnb and Vrbo instead of leasing their house or apartment to a regular long-term renter, which is one reason why there are so many of these units in the state, Johnson said in the report.Meanwhile, data from Point2Homes shows that apartment rents in Panama City Beach have climbed up 5.6% over the last 12 months to more than $1,830 per month. Single-family homes are renting for closer to $2,800 per month as well.
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