As a resident of the Gulf Coast of Florida (Bradenton) we just witnessed the strength of Mother Nature with the most recent passing of Hurricane Helene in the Gulf. Even though we did not get a direct hit we encountered a storm surge that reached 5 to 8 feet in some area. I do a lot of business on the nearby barrier islands of Anna Maria and Longboat Key. Yesterday I toured Anna Maria to help a couple of my clients that experienced the effects of the surge. One lost a car and all his belongings in the lower level of his house. Another lost his primary residence plus his vacation rental and will be staying with me for the next month while he sorts out his home. As a former resident of both islands, I was shocked to see the damage firsthand and to also see all the homes that where I once lived having to dig out from the sand that came with the surge.

Coming back to my own home off the islands I could not help to think how this event is going to change our local area in the near-term. Most owners of short-term rentals on the islands and the nearby areas have been dealing with the triple whammy of a slowing economy effecting rental revenue this year, higher insurances and higher property taxes. A lot of people are losing money or operating at breaking even at the moment.

This hurricane has obviously affected the available supply of available units. With reduced supply this could have a positive affect on rental revenue this upcoming winter season for short-term rental owners of homes that were not negatively impacted by the storm. Long-term this will likely raise insurance rates for all owners, compounding on top of sky-high current insurance rates. Will this cause more short-term rental owners to sell out on top of the noticeable increase we have seen this year because of the triple whammy?

I have had several of my short-term owners go to a self-insure model (i.e. they only get liability insurance on paid for properties) in recent years. I asked why they would do that. One of my owners put it to me this way. He paid less than $500,000 for the property in the early 2010’s. Today the property is worth around $1.6M. Two years ago, his insurance was approximately $17,000 a year. A year ago, it increased to a little over $28,000. This year it went over $40,000. At that point he cancelled all insurance except for liability. He could not make a profit with that high of an insurance bill annually. He figured worse comes to worse he could sell the property for land value and still recoup more than he paid for the property. I wonder how many other property owners will be doing the same when they get notice of this year’s increase?

Do you think this storm will cause prices to finally decline in the once red hot short-term rental market in Florida?

Tampa, Florida

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