Dear Gene Carter Team,
Vacation rental incomes have been a roller coaster this year. Are rentals for 2020 down 10% or 75%? The real numbers seem to vary depending on the type of property and the type of rental management.
Condotels seem to have fared most poorly, with YTD incomes through August down 35% to 50% from 2019 figures. This could be expected since they are heavily dependent on group sales, which have been all but eliminated during the pandemic.They are adapting by marketing to individual families and their occupancy rates seem to be improving going into the fall.
Offsite rental management companies have experienced wildly different results from one to another, with some experiencing income decreases of 30% to 50% and others experiencing little or no changes from 2019 figures. Some just seem to have handled the adversity better than others.
The one group of vacation rental properties which have appeared to generate the most consistently strong incomes are the ones properly managed by owners handling their own rentals utilizing VRBO, airbnb, etc. This takes some time and effort (It’s not for everybody) but they get lots of repeat guests who are willing to pay top dollar to stay in a condo they are familiar with and know they like.
Overall, our rental season was disappointing but not the disaster everyone predicted back in April. It certainly didn’t meet the worst-case predictions. Much of the decrease was due to the loss of all rental income from mid March through late May. However, summer incomes were only somewhat lower than normal and seem to be improving going into the fall.
What to expect next year? I believe that vacation rental incomes will be back to normal or at least close by next summer, if not sooner - assuming that one or more of the many Covid vaccines under development is effective and assuming we don’t go into a deep recession.
One silver lining to this year’s poor rental figures is that I think there will be good opportunities over the next few months for purchasers of investment properties to pick up some bargains. I’ll cover this in more detail in my next newsletter.
Over the past five weeks, new contracts for condos in oceanfront buildings were up a sizzling 46% year over year. Also, the same five weeks produced 13 % more new listings than the same time period in 2019. Large condos, especially in North Myrtle Beach, have been the best sellers. Condotels have been selling slower than other segments of the resort condo market but I don’t think this is a long-term situation and I’ll give you my thoughts on it in the next newsletter.
Covid Update: The mask mandate for indoor businesses has just been extended for another 60 days. Schools are reopening, although with many limitations. New Covid cases have decreased from 250 per day in June to around 20 per day.
Check out all our usual Grand Strand Market Reports, sales and listing updates, new Beach Pro Team reviews, and my Best Buys.
Greetings from the Grand Strand!
As always, I hope you are healthy and well. The local news continues to improve regarding Covid but once again I’m going to cover other issues first.
Although not every resort condo owner or a potential owner is concerned with vacation rental income, it is significant to many. It’s been a roller coaster this year. We were off to a good start. Then, from the latter part of March through late May, all short-term rentals were shut down by our local governments. We saw an unexpected boom in June as things opened back up. This was followed by a slowdown in July as Covid cases escalated in our area and a number of states mandated14 day quarantines for visitors to our state. Now, following a big decline in local cases, vacation rentals seem to have picked up again as we enter the fall season.