If you’re looking for a crystal ball or a palm reading, we can’t help you.
What we can do is give you our thoughts on what the real estate market trends currently look like. We can share the insights and the predictions that we have been following and talk about how to best position your own investment properties to navigate these shifts and trends.
As property managers and real estate professionals with access to a lot of interesting data, the demand, the prices, and the activity in the Florida sales and rental markets have kept us busy for the last few years. We’ve seen higher rental rates, low vacancy, and an increasing demand for well-maintained rental homes. We’ve seen the sales market remain strong and competitive, even while it peaks and shrinks elsewhere.
A lot of people are moving into Florida, and that’s creating a huge need for housing.
At Anchor Down Real Estate and Rentals, we make it a point to stay up to date on all the industry trends and market shifts that will impact the properties our clients own. We work in both long term residential rentals as well as short term vacation rentals, so we gather a lot of data that points to a lot of diversity within our market.
Our property management insights and predictions for your future investments mostly focus on technology, tenant demand, and remote work.
For us, property management, despite the current trends and market demands, always comes down to the basics: knowledge and customer service. We’ll continue doing what we’ve always done best while we adapt to the needs and demands of the market and our owners and our tenants.
Here are some of the anticipated trends that we find most interesting.
Rising Rental Values and Home Values
Rents are high throughout the Sunshine State, and especially in highly desirable markets along the Gulf Coast and in Central Florida. The recent increases in rents are perhaps not as dramatic as they were a year ago, but you shouldn’t have to lower the asking price for your rental properties quite yet. Recent statistics show that the average rent across the state is at around $1,800, and prices have increased by a whopping 45% since 2020.
We expect that rents will continue to be high in our market. As you think about where you’ll be pricing your own properties, you should prepare for stabilizing rents, but even as they settle, those rental values will remain high enough that you can increase what you earn every time you sign a lease renewal.
As we head towards the end of this year and into 2024, we expect to continue seeing well-qualified residents who are financially comfortable and more than prepared to continue paying higher rental values. Their expectations will also be higher, so you’ll have to be prepared for that. Think about what you can offer that attracts good tenants and justifies a higher rent. Tenants today are looking for value and extras.
Sales prices remain high, too, and it’s definitely a seller’s market, still, throughout Florida. While there’s more inventory showing up, we’re not sure that a huge surge in home buying is something we can reasonably expect. Mortgages are still pretty expensive, thanks to higher interest rates. If you’re in a good position to buy, picking up another investment property is always a good idea. Be smart with the way you leverage your purchase so you can count on cash flow and appreciation.
Vacation and Short Term Rentals
Short term rental homes are having a moment.
People are looking for new ways to travel, and they want real experiences rather than impersonal hotel rooms. Renting a home or a condo that’s all theirs provides some space, privacy, and a lot more flexibility when it comes to cooking, relaxing, and entertaining. If you identify and purchase a property in a location that’s ideal for tourism (which is most of Florida), consider using that property as a short term vacation rental. Some things to know:
- You’ll have to furnish it. Not only do you need beds and sofas, you’ll also have to provide dishes and cookware as well as small appliances such as toasters, coffee makers, and microwaves. Budget for this.
- There’s a lot more turnover. Instead of having the same tenant in place for a full year or even longer, you’ll have new guests by the week or by the month, depending on length of stay.
- You’ll need more support. Cleaners, maintenance workers, and property managers will become even more essential.
There’s an opportunity to earn more on a per-night basis when you’re renting out a short term property. However, you also have a higher vacancy risk. This is an investment to think about, however, especially if you’re looking to diversify your existing portfolio. In Florida, vacation homes are always an excellent investment, especially if they’re close to the beach, major sporting arenas (think spring training baseball), or popular theme parks.
Remote Work and its Impact on the Real Estate Market
One of the reasons for Florida’s population explosion is the remote work trend. If people can work from anywhere, why wouldn’t they want to work from Florida, where it’s usually sunny, warm in the winter, and full of things to do?
If you’re renting out properties that are presently occupied, think about the tenants you might have in place. Do they go to work every day or are they generally working from home? Maybe they’re working from home a few days a week and commuting into the office one or two days a week.
It’s quite likely that you’re renting a home to remote workers. Even before the pandemic, many people working in specific industries had normalized the idea of working from home at least a few days a week. Tech companies were especially known for their remote workforce.
More and more companies since the pandemic have embraced a tolerance for remote work. Some of them even promote it, preferring to save money on overhead with few people coming into the office.
Remote work is more than a trend; it’s a reality now. Companies have noticed that their employees are happier and more willing to be productive when they don’t have to commute into the office every day. Meetings are taking place online via Zoom and in large virtual conference rooms. New technology is enabling collaboration in creative ways.
This is more than a trend; remote work is absolutely here to stay. It’s having an impact on the local rental markets and real estate markets all around Florida. Higher prices have been blamed (credited?) on remote work and population increases. You may have noticed that tenants are looking for new features and amenities in rental homes. On rental applications, we have noticed that we’re verifying employment from companies that may not be local to Florida.
What does the remote work trend mean for real estate in general and for you and your investment property? How does the remote work trend impact the entire housing market in Florida and property management services in our state?
This is actually a benefit, especially for a market like those we serve around the Tampa Bay area, Bradenton, and Anna Maria Island. We aren’t a huge city like Miami that’s plagued with traffic, congestion, and a freakishly high cost of living. We happen to be located in a place that people want to be.
The increase in remote working has a positive impact on our housing market even as it contributes to higher prices across the board. This is because the ability to work from anywhere is drawing people to the region. There’s the weather and the opportunity for recreation and fun. There are sports, there’s plenty of culture and art, as well as food, nightlife, and fun. Florida is unique, and we don’t expect that people will suddenly stop moving here.
Thanks to the popularity of remote work, our incoming tenant pool no longer feels the need to live within commuting distance of their workplace. That opens up a lot of possibilities for renters who are looking for a new home.
It’s not a bad idea to make your property as attractive as possible to these remote workers, who are making up a larger portion of the tenant pool. Things to consider for your rental home include:
- Dedicated working space. This might be a home office, a den, or even an open floor plan that offers a great place for a desk.
- Good technology. Whether you’re providing the Wi-Fi or leaving tenants to set up their own service, make sure there are high-speed options.
- Flexible lease terms. Remote workers may be a bit more nomadic. Maybe they only want to rent for three or six months. This is another good argument for short term and vacation properties.
We’re watching this trend and how it continues to impact the Florida real estate market.
There’s a lot more we can tell you about what’s coming in the real estate and rental markets. Let’s talk about it together. Contact us at Anchor Down Real Estate and Rentals.
