VERO BEACH — Latecomers to the island high season may have a tough time finding a house or condo to rent, especially in desirable Central Beach, according to rental agents at top real estate companies.
“We have been insanely busy,” says Carol Prezioso, who with her partner Carol Makolin runs Norris & Company Rentals.
“If seasonal rental requests are any indication, this should be one of the busiest seasons in years. Island rentals are hot, hot, hot! “When we tell the people who call in December there is nothing available for February, they are shocked. They say, ‘Well, this is when I always call and I never had a problem.'”
But this year is different.
“I have never written so many leases in all the years I have been in Vero,” says Christine McLaughlin, owner of Shamrock Real Estate Corp. “The market is the strongest it has ever been. My seasonal leases were booked up by mid-October.”
“We are extremely busy this year,” says Susan Powell, rental manager for David Walsh and Associates Real Estate. “That is a good sign. In my experience, when the rental market is strong the sales market is not too far behind.”
“This is the first season we have been lacking inventory,” says Angela Waldrop, rental manager for Dale Sorensen Real Estate. “It is difficult to find homes to place people in for the season. All of the agents are talking to each other much more frequently to find places for their clients. In the past we could find a property among our own listings, but now we have to rely on each other.”
Waldrop says she is seeing a trend toward longer stays this year for the first time since she started handling rentals for Sorenson five years ago, with people who came for a month in prior years leasing for two months or longer.
“We are seeing a real spike in 3- and 6-month rentals for next year.”
The island rental market is hard to define precisely because not all properties are listed with the MLS and inventory changes constantly as houses and condominiums are rented or put back on the market.
“There are upwards of a thousand rentals on the island,” says Powell. “But it is difficult to know the exact number because many owners rent out their own property without going through an agent.”
According to Trulia.com, a widely used source of real estate information, of more than 1,000 rental units in the 32963 area, only 85 were available the week before Christmas.
The properties listed on Trulia ranged from a 2-bedroom, 2-bath condo in the Riverwalk Condominiums building offered for $950 a month to a 4,200-square-foot golf-course home in Orchid Island offered by Walsh and Associates for $12,500.
Zillow.com, showed 116 rentable properties, ranging from the same $950 unit on A1A just north of Jaycee Park to a big beautiful 4,600-square foot home on Springline Drive in The Moorings that’s available for $18,000 a month.
“There are just 30 unfurnished properties available on the entire island,” says Prezioso. “We have only 19 rental properties remaining here at Norris.”
Most island agents agree Central Beach is the hot part of a hot market.
“That is the most difficult place to find available rentals,” says Waldrop.
“Central Beach is extremely strong,” agrees Powell. “Everybody wants to be close to the restaurants and shops and the beach, and there just isn’t enough inventory.”
McLaughlin says surging demand has begun to push up rental rates.
“There are no inexpensive ‘deal’ listings anymore. Annual rents that commanded $1,600 last year are up around $2,000 or higher.”
“The rental rates on annual and seasonal listings are slowly creeping up,” agrees Powell. “I’d say there has been a good 10 or 20 percent increase on annual leases.”
“Depending on what product you have, prices are the same or up a little bit,” says Waldrop. “But next year is when we will see a stronger increase in rates. I will be evaluating the market with all my clients and raising rates for the 2013 season if demand stays this robust. It won’t be a drastic increase but will help owners after the hit they have taken over the past five years.”
The uptick in demand isn’t as strong in some outlying neighborhoods.
“Most of the rentals that have club memberships tied to them are gone, but we still have availability,” says Allison McGraw, rental manager at The Moorings.
There are 120 rental units at the Moorings, ranging in size from 1,100-square-foot condominiums to large waterfront houses.
McGraw says demand for the units is up this year compared to last but that prices are slightly lower, with renters making offers below the asking price, same as homebuyers typically do.
Properties are still available in other parts of the island, as well; just not necessarily the property that is a renter’s first choice.
“There are some 2-bedroom condos available,” says Waldrop, “but the availability may be broken up, a month here or a month there.”
The jump in rental demand on the barrier island is part of a nationwide trend that has begun to push up the number of multifamily housing starts.
Foreclosures forced many people into the rental market and with vacancy rates falling investors are ponying up to build new apartment buildings.
According to the Sun Sentinel, 40,000 households shifted from ownership into rental properties in south Florida between 2006 and 2009, and a new report from commercial property broker Marcus & Millichap says south Florida vacancy rates remain on track to fall below 5 percent by the middle of 2012.
The report continues: “Property owners have started consistently raising rents on new leases and a period of more robust rent growth looms in the quarters ahead. Multifamily construction appears poised to increase. In addition to the growth in rental stock, many condominium developments appear to be in the works.”
Low interest rates and a wobbly stock market help drive the increase in multifamily construction. Not only is cheap money attractive to developers, but the CAP rate or return on investment in rental properties is much higher than for bonds or most other investments.
“The single-family market is finally getting off the mat,” Patrick Newport, a housing economist at IHS Global Insight, told MSNBC News recently. “The multifamily segment is continuing to make small strides, and we should expect good housing starts numbers in the upcoming months.”
