The persistently low mortgage rates have certainly enticed more Americans to enter the home buying market. Of course, they have been met with the challenge of extremely tight housing inventories throughout the country. According to data from the Commerce Department, the home ownership rate increased year-over-year in the fourth quarter of 2020 to 65.8%. This is 0.7% points higher than in the fourth quarter of 2019 (65.1%), but 1.6% points lower than Q3 of 2020 (67.4%).
With regards to vacancy rates, they have remained relatively unchanged. At 6.5% for rental housing and 1.0% for homeowner housing, these are not much different than the 6.4% rental vacancy rate in Q3 of 2020 and Q4 of 2019. The home ownership vacancy rate was 0.5% points lower year-over-year, but not statistically different from the Q3 2019 rate of 0.9%.
A “remote rental” boom?
Vacation destinations such as South Florida are also experiencing a “remote rental” boom currently due to the pandemic. With more companies opting to have their employees work remotely from home, many Americans are taking advantage of this new working environment. This has created an opportunity to experience South Florida living temporarily in rental properties. In many instances, these are people that would potentially consider retirement in The Sunshine State. By working remotely in South Florida, they are able to test out the market to see if they enjoy it. With this said, this has led to an increasingly strong rental market. Due to the higher seasonal demand from January through April, it is common for prices to be higher during these months. Typically, there is more rental inventory with lower prices as we approach the summer months. If you are considering a short-term stay of 3 months or so, finding a rental during these months will be less challenging.
It is important to note that due to the pandemic, data collection operations for the commerce department were affected during the fourth quarter of 2020. In fact, the commerce department released the following statement addressing this:
“In-person interviews were only allowed for portions of the sample in October (100%), November (98%) and December (84%). If the Field Representative was unable to get contact information on the sample unit, the unit was made a Type A non-interview (no one home, refusal, etc.). We are unable to determine the extent to which this data collection change affected our estimates.”
In closing, we expect the real estate demand in South Florida to remain strong for the foreseeable future. Furthermore, the sustained low interest rates are also increasing buying power. Whether you are considering the purchase of an income-producing property, a second-home, or a new primary residence, we can help. Contact Live South Florida Realty, Inc. today!