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How Are Short-Term Rentals Impacting Miami's Market?

Key Takeaways

  • Miami welcomes tens of millions of tourists annually, creating surging demand for short-term rentals.

  • Transient lodging drives up rents and home prices, spurs development that threatens the soul of neighborhoods, and creates headaches for condominium communities.

  • Some condo associations consider homestay schemes more than trouble than they’re worth.

  • Condo property managers can take various measures to curb unwanted short-term rentals and protect the best interests of residents and associations.


high rise condo building

Miami is the center of short-term accommodations in the United States. It erased its record-breaking 26 million international visitors in 2022 during the first six months of 2023. If you factor in domestic vacationers who fly to South Beach for spring break every year or watch the Dolphins, Heat, Marlins, or Panthers play on their home turf, you can see why the Magic City’s travel industry is as hot as the sun.


The Florida and Miami governments rely on transient lodging to serve millions of tourists, swelling government coffers. However, the surge in short-term rental supply in Miami has inflated the housing costs of those who call the city home. Nobody feels the pinch harder than long-term tenants.


The perceived profitability of transient lodging incentivizes landlords to target tourists instead of renters. The result is a smaller stock of long-term home rentals, giving tenants fewer options.


As of March 2024, landlords, on average, charged renters in MIA 5.40% higher than reasonable or $139.16 more per month. Those who wanted to avoid being “house poor” — someone who spends 30% of their annual income on rent — must make no less than $108,608 a year.  Someone earning about $3,500 a month can still get by in some corners of the city, though.


Housing in an area is less affordable to non-vacationing renters when the number of Airbnb listings rises within the corresponding zip code. This phenomenon accounts for one-seventh of house appreciation, making Miami residences more expensive.


The proliferation of vacation rentals in the Sunshine State’s second-biggest city can change neighborhoods for the worse. It can trigger gentrification, improving the aesthetics of an area to make it more palatable to wealthier newcomers and displacing poorer residents in the process. Residents also worry the influx of visitors can erode their quality of life.


The State of Short-Term Lodging in Miami

The 305 has more than 84,000 listings across Airbnb and Vrbo alone. Real estate investors are confident that the Gateway to Latin America’s tourism performance will sustain this upward trend in the foreseeable future. Thousands more condominium units are under construction downtown — many of which are too small for owner-occupied residents but big enough to house overnight guests.


Why Condo Associations and Residents Hate Vacation Rentals

Aside from long-term residential tenants and homebuyers in Miami, condo community associations consider homestays problematic for six reasons.


1.Community Rule Violations

Short-term renters are prone to breaking condo house rules. They have little knowledge of certain restrictions the community observes, so they can inadvertently upset residents. Moreover, vacationers have less incentive to be nice to others or leave the rental in the same condition they found it because they don’t live there and their stay is fleeting.


2. Accelerated Building Wear and Tear

Frequent usage shortens property service life. Renting out space to various individuals throughout the year can result in premature damage to the condo unit and the building’s communal areas.


3. Safety

Living in a densely populated building community increases the risk of property crime. Hosting unscreened individuals with malice endangers residents.


4. Increased Operational Costs

Property managers overseeing condo communities usually have to hire more people to keep the building structurally and physically safe.


5. Insurance Premium Rate Hikes

The dangers linked to short-term renters make it more costly to insure a unit, even if the condo association’s master policy provides all-in coverage. Insurance companies generally want more cash when dealing with riskier customers — those who are more likely to file a claim.


Mortgage Guideline Noncompliance

Condo mortgages backed by the Federal Housing Administration require at least 50% of the building to be owner-occupied — in other words, investors can’t buy half of all units. Breaking this rule can have dire consequences.


Case Study — Opera Tower vs. Airbnb

In 2020, Opera Tower was in hot water after the City of Miami sent it a cease and desist letter for allowing unpermitted short-term lodging within its community. Subsequently, the condo association took Airbnb to court, blaming it for turning its neighborhood into a de facto unlicensed hotel. The Opera Tower leadership claimed the homestay broker let unverifiable hosts list units within its property.


The association added it also suffered due to Airbnb’s practices. The complaint said its annual insurance, security and janitorial expenditures ballooned by more than $850,000 since 2018 due to the undesirable behaviors of transient guests.


Furthermore, Opera Tower was the subject of nearly 400 911 calls from June 2017 to June 2020, citing Airbnb guests committed various crimes, including rape, assault and robbery. Despite these incidents, the complaint accused the San Francisco, California-headquartered fintech company of not kicking the host guilty of violating its terms and conditions off the platform.


Although Opera Tower took out its frustration on Airbnb, some residents rent out units on other marketplaces, including TripAdvisor and Booking.com. Most listings implied the rentals were at the condo, while a few mentioned the building’s name.


Ways Condo Property Managers Can Stop Vacation Rentals

Condo property managers can’t curb transient lodging the way policymakers can. For instance, the Sedona City Council approved a program paying vacation property hosts $10,000 max to remove their listings from short-term rental platforms in exchange for providing housing to local workers. However, you’re powerful enough to implement these six measures to stop transient lodging in your condo.


1.Update Purchase Agreements

Short-term rentals burgeon because their governing documents are toothless. Updating the purchase agreement is worth considering to discourage future property owners or their tenants from doing it. Amending existing governing documents to address the practice specifically may also be an option.


State legislation regulating transient lodging is ever-changing. Seek legal advice to explore ways to change the language in the agreement without breaking the law.


2. Limit Purchase to One Unit per Person

Residents who own multiple units are more likely to engage in this business. Preventing anyone from buying more than one residence can make a difference.


3. Look Out for Active Listings

Keep an eye on short-term rental listings involving your condo. Knowing whether someone’s advertising units in your building is one of the initial steps toward addressing unwanted lodging activities.


4. Check Florida’s Database

Serial short-term rental hosts must get a license from the Department of Business and Professional Regulation to operate. Use the agency’s tool to look up licensees by name, license number, location or license type. This online service can aid your investigation and report condo residents conducting unpermitted activity.


5. Streamline Self-Reporting

Make it painless for residents to report short-term rental hosts who may be violating a community rule. Empower them to file a complaint discreetly or anonymously to encourage everyone to speak up while protecting their identity and safeguarding them from retaliation.


6. Improve Enforcement

Establish a clear protocol for investigating transient lodging complaints. Reports must come with solid evidence — otherwise, you can’t do anything about the suspected offender.


If a complaint has a basis, figure out the flow of communication. Determine what to include in the correspondence and which recipients should get it. This way, you can inform all stakeholders and document your actions. Remember to keep the complainant in the loop separately to show you take their concerns seriously.


Give the offender sufficient time to respond or challenge the alleged violation. Consult governing documents to know how and when to escalate and litigate the matter.


Conclusion

Short-term rentals in Miami are too profitable to discourage property owners from renting to vacationers. Still, condo residents must only engage in this activity when they’re considerate enough to their neighbors. Familiarize yourself with the limits the law allows to regulate your condo community accordingly and permit law-abiding vacation rental operators to do their business without jeopardizing the comfort of other residents.


Evelyn Long is a writer that specializes in housing market trends. She is also the founder of Renovated Magazine, where she writes essential resources for renters and homeowners. She has contributed to several other sites like National Association of Realtors and Realty Executives. Subscribe to renovated.com/subscribe for more posts by Evelyn.

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