Should 30-A rental rates increase?

Would significantly higher rental rates in high season keep renting visitors away?

Yes!:cool:

I don't think increased rates would keep the true beach lovers away from So Wal. There are those that love the So Wal area and can't afford to own due to other committments but would pay dearly to have the opportunity to visit even if the rates are higher. Think of higher rates as security for having the right type of renters in the properties and less chance for damage. The owners would be grateful for that.

Would significantly higher rental rates in high season keep renting visitors away?

IMO that is just one consideration...there are many more:

Turnover in properties over the last couple years have many present owners who've bought in at top-o-the-market prices; so whereas the person who purchased a condo/house in 1999 at a much, much lower price may have been able to show a profit, the present owner would never be able to produce profit unless they increased rental rates significantly.

....Ditto on increasing costs of taxes, HOA fees, and especially insurance.

The number of subdivisions/condos for vacation homes have exploded in this area in the last couple of years (to satisfy the demand of speculators buying for quick flips). These additional vacation properties, which flippers now find they can not sell, are added competition for rentals where once there was none.

The economy is tightening up with major layoffs in manufacturing and housing, increasing gas prices, and inflation now showing up in food and living expenses. Now that the housing boom is subsiding across the nation, and folks are no longer able to use their homes as ATMs to draw discretionary spending dollars, vacationers may be more apt to stick to a tighter budget (if they vacation at all). Many may choose a lower cost alternative to a beach vacation than to take no beach vacation at all...these folks may opt for a condo at PCB rather than SoWal if the price is right, or cause them to delay making plans and using their leverage to snatch a "last minute bargain." This last tactic also gives them some peace of mind that they won't end up "wasting" their vacation deposit should a passing nearby tropical storm or hurricane make for a lousy week at the beach.

There are always the folks with unlimited funds that will vacation here no matter what...some of them already bought their own places during the boom, so they're out; others will stay in the high-cost homes and resorts; and many will be repeat visitors who've got that favorite place they return to time and again. The mid-priced, non-beachfront properties will have work much harder to obtain a competitive edge.

Competition and costs have exploded over the last 2-3 years, the internet makes comparing prices and locations much easier, and the tightening economy is being felt by the middle class...these three things are the major considerations you've gotta keep in mind when selecting a price-point for your vacation rental rates this year.
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WLD,

Not a bit.

IMHO Yes - I think it would turn many people away.... not my area of expertise but plain ole gut instinct!!!

Good analysis and conclusion, Shelly.

As a rental property owner I agree with some of Shelly's observations about internet price comparisons and competion for the renters: however, I do agree that rentals will be too hard in South Walton.

The area's reputation continues to grow and those of us from Birmingham(me), Atlanta, Nashville,etc are telling friends and more are wanting what we have, compared to the highrise jungles.

Eventually prices will go up for our area significantly I predict due to demand and costs.

I also don't know where shelly thinks all the layoffs are? Detroit maybe. But the south has a tight labor market and commercial business is good and thats where most of are renters are coming from....at least for now! Airport may change that in future.:roll:

I also don't know where shelly thinks all the layoffs are?

Real Estate, granite countertop manufacturing and related industries.

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I also don't know where shelly thinks all the layoffs are?

The textile industry.

Would significantly higher rental rates in high season keep renting visitors away?

As one who has vacationed in the destin and SoWal area for over 20 years, it would have an impact on my choice. Yes, we comparison shop online, and would choose a location for our budget. Nothing compares w/ SoWal, but at some point people may consider other locations like Hawaii, cozumel, etc. Not the same I understand, but some of us that come from the Midwest, can choose either coast or gulf. And, to us since the real estate market is declining, and home prices lower, it would seem a little like gouging.

Just a little fyi, but for me, I hunt for places that have lower rates (fall rates) first week in August, lower crowds, and better rates in the full summer sun.

I vacationed in PCB for most of my 50+ years and loved it. The properties in PCB now are too big, too many, and taking away from the bech. It is difficult to see the beach when riding down Front Beach Road. We discovered 30-A about 20 years ago and love the area. It has built up too but does not have the "skyscrapers" and vast number of rooms that attract so many people. The rates in PCB have also continued to rise. I prefer to pay more for the ability to actually see the beach with ease and know the community really cares about what happens along 30-A. To me, the minimally higher rates would be well worth the rental cost of the condos in PCB are skyrocketing.

I understand Shelly's info on the tighter budgets but also recognize that many make sacrifices daily and will continue to do so to be able to relax in the area you most love and feel comfortable.

Decisions like this are not easily made by the owners. I wish the best for those of you that have to make decisions.

The market that comes from the South - Texas to Florida and North as far as Tenn/Kentucky, pretty much always drive down. Every time I am at High Pointe, those are the license plates that fill the lots. For a family of 4 or more, that means significant savings over those who fly in from the midwest or further out. We get repeat renters, neighbors, and friends who do not like the high rises, want a little more quiet, want an uncrowded beach and so on. I do think that the off beach properties will have to work harder and be careful on price points more than the beachside as those who want beachside will be happy to pay for it. Having said that, our rates have been pretty stable for the last few years.

Well, my immediate question is what does the market dictate? Are 30-A properties completely booked and are owners having to turn people away? From my experience checking availability calendars for vacation rentals in SoWal, I'm not seeing evidence that the demand is out of control.

On the other hand, I wonder about the wisdom of raising rental rates. If you would rather your property sit empty more often in order to get the right sort of renter, you have to ask yourself what that is going to do to your favorite local restaurant/coffee shop/retailer. If the number of summer visitors declines, it's going to hurt those local businesses.

Demand for vacation rentals is definitely up in recent years. But there's also been a ton of new construction that seems to have not only kept pace with that demand, but it may have gotten a wee bit ahead of it. It's not too long ago all of Watercolor was pine trees and scrub, and now it totally dwarfs Seaside.

It's that supply/demand curve that controls rental prices, and I see said curve as being more or less in equilibrium right now.

In that kind of market, an increase in homeowner carrying costs doesn't do anything to fundamentally change the demand curve. A higher rental price just shifts you to a point on the curve where there's less demand for your product. You only really get to shift those increased carrying costs to renters when the supply/demand equilibrium goes out of whack and allows for readjustment, and right now there are no signs that it has.

In my opinion, rental demand for beach front properties as well as properties within easy walking distance to the beach is very high. I have raised my rates 8-10 percent each of the past 2 years and have more bookings earlier this year than ever. However, I also made a significant investment (more than 80K) in refurbishing an already nice property 2 years ago.

The only resistance I am seeing is during the peak season. Most beach rental properties are already priced 40-50% higher in June & July than in late August or September and 100-125% higher than in November through February. Next year I'm contemplating raising my rates only about 2% during the peak season and 6-8% during the rest of the year. This year March, April, May, August and September booked up very fast but I've still got a couple of open weeks in July. For what it's worth. :blush:

I increased my rates on gulf front by 10 percent this January and am booked over 30 weeks already in 2 properties out of the next 52 weeks. The property I have off the beach cannot be increased because it rents very poorly in comparison.

I increased my rates on gulf front by 10 percent this January and am booked over 30 weeks already in 2 properties out of the next 52 weeks. The property I have off the beach cannot be increased because it rents very poorly in comparison.

Pirate,

How long ago did you purchase your gulf front properties?


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2001, 2002 and October 2006.

2001, 2002 and October 2006.

Would the 2001 & 2002 properties (with the 10% increases in rent) be the "two" that are booked for the 30 weeks out of 52?


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