Sell my hurricane damaged house in Cape Coral As-Is. Short term rental

Hurricane Ian threw a huge monkey wrench in the Southwest Florida real estate mix, one of the most destructive hurricanes to ever hit Florida’s coast. Hurricane Ian caused power outages for weeks, the wind and water surge damaged many houses, leaving many Cape Coral landlords asking questions…. Will short term rentals be in demand? Can you afford to keep your home if short term rent demand falls? No one knows for sure what will happen, lets walk through the events that have led us to where we are today, stay with me, I’ll tie it together in the end.

Normally when people are afraid the market falls, the opposite happened with Covid

Covid had a weird effect on real estate. During the global pandemic, people were very scared and most of the United States closed their economies. All we saw on the news was how scary Covid was. Typically, when people are afraid it’s not good for the housing market, however the opposite happened with real estate in Florida. Property values exploded, especially in Cape Coral and Southwest Florida. Florida’s leadership decided to go a different route than the rest of the country when they opted to remain open. Many buyers who were on the fence about moving to Florida decided to act and move to Cape Coral. Florida staying open during the pandemic created a lot of demand in housing and then on top of the added demand we had record low inventory accompanied by record low interest rates. It was a perfect storm for real estate to explode in growth. It has been a crazy wild series of events that set up a housing scenario no one could have predicted in their wildest dreams.

Florida staying open created massive influx of vacationers, best case for short term rentals

When most of the United States shut down, people got tired of being locked up at home and all the mandates and saw Florida was wide open and people living their lives business as usual. The Unites States was then sending families stimulus money, people had some extra cash. Florida was the most logical choice for a vacation that would be somewhat normal vacation, vacationers flooded the state. Even law makers who advocated for lock downs were seen vacationing in Florida to escape the mandates they pushed. Everyone wanted to be in Florida and short-term rentals exploded.

Lockdowns created the work at home era

Across the nation, when businesses were forced to shut down many opted for their employees to work from home. Now that employees could work from home and not need to live in a specific location due to job proximity. Many decided to move to Florida, why not live in the sunshine and by the beach if you can keep your job and work from home. This was another push driving housing prices up.

These unique events created so much demand in Cape Coral, Investors bought homes

With all this demand real estate investors piled into short term vacation rentals, short term vacation homes were booked solid, vacationers more than willing to pay top fees, the returns were record setting. Other investors and new investors saw how well the short-term rentals in Cape Coral were producing and wanted in on the action and started buying short term rentals. I watched the short-term rental inventory on Airbnb and VRBO skyrocket, pages and pages of homes to choose from.  There was now a lot of inventory for vacationers to rent, even though short term inventory was growing fast and there was a lot to choose from, the short-term rentals were still renting very well.…. and I asked myself, is this sustainable? Is the short-term rental market starting to get over saturated? Will the demand maintain in short term rentals if less people vacation? Many investors purchased their short-term Cape Coral home in the last 2 years at peak housing prices, albeit lower interest rates but still…peak prices.

 A lot of Investors purchased their homes using peak rental data and best-case scenario, the highest demand, the highest real estate prices, this was not sustainable in my opinion. I knew eventually covid would end and Florida would go to normal levels again and when that happens there will be an oversupply of Cape Coral short term rentals. I also pondered….. what if the economy goes into a recession as many are predicting, surely less people will be vacationing. Another concern I always have with short term rentals, when too many short-term rentals take over a neighborhood, neighbors start to complain and lobby the city to make changes, the city could make ordnance changes and start limiting or banning short term rentals, it’s something to consider when buying short term rentals, so far Cape Coral hasn’t made any major changes but it can happen at any time.

A change in the air

Spring 2022, inflation started spiking, 40 year highs! This caused the Federal Reserve to aggressively raise rates, mortgage rates went from below 3% to now in October 2022 over 7%!! Yikes!!! With mortgage rates spiking, the stock market fell, gas prices skyrocketed, food, energy cost jumped, consumers quickly felt they have less money and slowed their spending. Vacations were being cut, I started seeing a lot more vacancies in Cape Coral short term rentals inventory. I wasn’t waiving a red flag but certainly paying attention, I like to give a market 4-6 months’ time to see a trend. The market was red hot all the way into June 2022 but was cooling fast as we went into July, rates kept jumping and we hadn’t had enough time to see if what happening was a trend or just a slowdown. The real estate market trending this fall has been, increased inventory, massive price reductions, a huge drop in buyers. We are trending down, and on top of this downward shift there is talk everywhere of an incoming recession. This is where we are and now comes hurricane Ian….

Hurricane Ian enters the real estate market

I know it took me a long time to get to hurricane Ian, I wanted to tell the story of all the events that have been unfolding prior to Ian arrival and how unique it is. The market was already shifting hard when all the sudden hurricane Ian hit. It wiped out Fort Myers beach, Pine Island, Sanibel, Captiva, it demolished the pier, flooded many homes, knocked out bridges, changed the Florida landscape forever. The beaches are shut down, many restaurants are shut down, there is huge piles of smelly garbage and debris lined up along the road for miles and miles, there is flesh eating bacteria in the water, it’s all over the news and social media. How will this affect short term rentals???

How Will hurricane Ian affect short term rentals in Cape Coral

Many locals have been displaced; with locals seeking housing, it could give a short-term rentals a bump in demand, highly doubtful they will get the same rent rate. Some investors switched their short-term rental to long term to make the accommodation.  The downside, usually short-term rentals yield a high rent than long term. Another downside to consider, when things normalize, if the real estate market continues to slide down, you could get stuck in a long-time lease with a property losing value.

The hurricane, in addition the economy going towards a recession will surely cause many would be vacationers to cancel travel plans, along with closed beaches and destruction all over, it might be a ghost town for vacationers this season. Florida is a doing a great job repairing the damage at record pace, but it takes time to rebuild and it’s a huge smelly mess right now. Will enough be repaired for the busy season to attract vacationers? Will the recession be mild, or will it be more severe?  Did some demand fall off because some vacation properties were damaged? The dust is still settling, too soon to know. The answers will come in time. If you own a short-term vacation rental in Cape Coral and you are not filling up, you know the story better than anyone, you see the change in real time. If you’re not getting hurricane bump in demand, it probably won’t come, and you should brace for lower returns and may consider selling.

Some experts are predicting there will be a crash in demand for short term rentals.  I listened to this podcast, they are predicting a big drop in demand in areas that didn’t have a hurricane to contend with, AIR B&B crash coming

If you’re on the conservative side and don’t want to risk holding on to a short-term rental with all the unknowns, please reach out to us for a free market analysis.

What do you think will happen? Leave a comment below.

Thanks for reading,

SEll my Cape Coral house
Cape Coral House
Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

What's Your Home Worth?

Enter your info below and I'll send you a free market analysis.
  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *

Text or Call