Miami's Condo Market Shifts to Short-Term Rentals, Worsening Housing Crisis

Over 50% of Miami's 10,335 pre-construction condo units are intended for short-term rentals, driven by demand for luxury vacation rentals on platforms like Airbnb. This trend exacerbates Miami's affordable housing crisis, with the city already missing over 90,000 affordable units for renters making less than $75,000 a year.

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Aqsa Younas Rana
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Miami's Condo Market Shifts to Short-Term Rentals, Worsening Housing Crisis

Miami's Condo Market Shifts to Short-Term Rentals, Worsening Housing Crisis

Miami's affordable housing crisis is being exacerbated by a surge in pre-construction condo units being built for short-term rentals, according to a new report by real-estate firm ISG World. Over 50% of the 10,335 condo units currently in the pre-construction phase across Miami-Dade County and nearby Broward County are intended for short-term rentals, driven by the demand for luxury vacation rentals on platforms like Airbnb.

Why this matters: The shift towards short-term rentals has significant implications for the availability of affordable housing options, exacerbating the existing crisis and potentially displacing long-term residents. This trend also highlights the need for policymakers to address the root causes of the housing shortage and balance the demands of the tourism industry with the needs of local communities.

The report reveals that 31 pre-construction condo buildings in the Miami region are set to be turned into short-term rentals. "We've had a development industry that is adding more short-term rentals to South Florida inventory, and that's not what we need," said Craig Studnicky, CEO of ISG World. He suggests that developers should focus on building traditional rentals to meet the demands of the market.

The condo market in Florida is showing signs of a slowdown, with condo sales down 6.8% statewide in January from a year ago and pending sales down 3.5% on the year. In Miami, condo prices fell 3% in January from a year ago, sales dropped 9%, and new listings rose 27%. Buyers are facing challenges such as the soaring cost of insurance in Florida, which has jumped 102% in the last three years and costs three times more than the national average, as well as rising monthly condo fees.

Miami-Dade County has a $1.5 billion gap to provide adequate, affordable housing and is missing over 90,000 affordable units for renters making less than $75,000 a year. The shift towards short-term rentals is further straining the already limited supply of affordable housing options for local residents. Rowdy partiers staying in short-term rentals have also become a nuisance for Miami residents, with current Miami condo Airbnb rates ranging from $100 to nearly $400 per night.

In response to the disruptive behavior of some short-term rental guests, Miami Beach Police have implemented measures to curb rowdy behavior during spring break, including bag checks, restricted beach access, and heightened police enforcement. However, the underlying issue of the affordable housing shortage persists, with the trend of converting condos into short-term rentals further contributing to the crisis. As Miami grapples with balancing the demands of its tourism industry with the needs of its residents, the call for more traditional rentals and affordable housing solutions grows louder.

Key Takeaways

  • Over 50% of Miami's pre-construction condos are for short-term rentals, exacerbating the affordable housing crisis.
  • 31 pre-construction condo buildings in Miami will be turned into short-term rentals, displacing long-term residents.
  • Miami-Dade County has a $1.5 billion gap in affordable housing and lacks 90,000 units for renters making under $75,000/year.
  • Condo prices in Miami fell 3% in January, and sales dropped 9%, as buyers face high insurance costs and rising fees.
  • The shift to short-term rentals worsens the housing shortage, with developers urged to focus on traditional rentals instead.