Our Clients are demanding a clear understanding of the ongoing developments of CoVid-19 and what it means to their properties & rental income. In this article, we are going to examine the market developments and take a closer look at some of the properties in our portfolio.
Unprecedented Demand
About 950 people permanently relocate into the sunshine state Florida on a daily basis. These unprecedented demands come to some as a surprise amidst the CoVid-19 pandemic. The trend of many Northern American moving south shows that an increase in more space, better climate and lower cost of living is not changing due to concern over the virus.
Speculation is that the virus could in fact have increased the sense of leaving congested cities as being a great solution for a safer lifestyle. As Florida is a magnet of “snowbirds” also young families that planned to come for a short vacation consider moving into the economically booming region.
In a new report in the New York Times, the 2020 Miami Report states that at a daily average 950 people move from high cost, high tax regions like California, Chicago, New York and Boston to Florida.
Population Growth and Decline States of the US
New Contracts for Single Family Homes & Condominiums
This related well to a report by Douglas Elliman, published in August and stating that new contracts for single family homes and condominiums doubled in Juli and many of the central west coast and southern Florida counties.
From January to June, 2020, 80% of the real estate transactions were residential and real estate experts predict that this trend will continue driven by fear of a CoVid-19 2. Wave in the colder month and flu season.
FOCUS CHAMPIONSGATE
Our clients in thtat invested into the Championsgate area are relived because the market trends also reflect in their property occupation rate. While the first few month of the pandemic saw a negative trend, since May 2020 the situation started easing up.
Daily occupancy rates are increasing as tourists are starting to come back into the theme park capital of the worlds. Many parks are still at 50% capacity which is a safety measure to prevent the spread of the virus.
ChampionsGate, FL - Demand Growth Recover since May 2020
ChampionsGate, FL - Occupancy Rates show upwards trend since May 2020
COVID-19 case in Florida
The local real estate market showed a slowdown at the beginning of the pandemic followed by a surprise awakening. The real estate market is booming, but the number of CoVid cases is still concerning leading local counties to shut down beaches and bars. As of now, Florida has about 650.000 cases and 12.000 fatalities.
Buyers, especially from the northern regions have a specific demand, which is tied to the aim of escaping urban areas notably in increased sales of home offices, larger kitchens for increased in-home dining, home gyms and private pools.
Furthermore, Florida tax advantages make a relocation attractive and a major appeal for all new Floridian home owners. Florida residents are not paying any state income or estate tax and receive a homestead exemption of up to USD 50,000 on a primary residence.
Additionally, the Tax Cuts and Job Act of 2017 which limited the amount of total state and local tax that can be deducted on a federal income tax return to USD 10.000 boosted Florida popularity.
Population growth therefore has been increasing permanently, amounting to 343,000 new residents in 2018, resulting in a total population of 22 million residents.
In summary it's a fair assessment that while many businesses have suffered through closures in order to prevent a spread of CoVid-19, the real estate market has benefited from an increase of natural migration into our beautiful state.
If you have more questions, please address them directly to one of our team members at BlackTile Investment. We are here to support you in your investment project.
Sources: Bloomberg, ISG World
