Tuesday, April 14, 2020

What Comes Next?

Other than the shutdown of vacation rentals until April 30 (could be extended again) and slowed buyer activity the impact of the pandemic on real estate in Cocoa Beach is yet to be revealed. There have been some significant changes with mortgage requirements but I have not heard of a local sale that has been affected by those changes, yet. There has been no surge in new listings and no noticeable movement in prices as the economy has ground to a halt. Perhaps the effects on our little market will be minimal. As of the April 13 report there are still just six cases of Covid-19 in Cocoa Beach and one in Cape Canaveral.

How about long-term rentals? What happens to the newly unemployed renters of Cocoa Beach and their landlords as the coronavirus shutdown lingers? On April 2, Gov. Ron DeSantis signed an executive order suspending evictions and foreclosures for 45 days amid the coronavirus pandemic. What happens afterwards?

Being a tourist destination Cocoa Beach has a large number of restaurants and bars and a significant number of the renters here are employed in those businesses. We are past Easter and it appears the shutdown will be extending for several more weeks at a minimum and possibly into summer. Whether the public will be willing to crowd into restaurants and bars when they reopen is unknown but it's probably safe to assume the fear of close contact will remain with a lot of us beyond the reopening. Best case scenario is that the virus goes away quickly, all our establishments survive the shutdown and reopen with their full staffs to packed houses. The more likely scenario is that some don't survive and close permanently and those that do reopen do so with limited staffing until something like normality returns. That scenario leaves a large number of servers, bussers, bartenders and back of house workers with reduced hours or without a job in a beach town without a lot of alternative jobs.

Who will rent these condos and apartments if a substantial number of these workers are forced to move elsewhere seeking employment? What happens to rents and the value of the properties that these workers have been renting? Smaller, inexpensive condo and apartment units are the primary property type these workers are renting. For the record, maximum unemployment compensation in Florida for those who qualify and can wade through the excruciating application process is $275 a week. The CARES legislation promises additional compensation but we'll have to see how that plays out as it is administrated through Florida's broken and overloaded system. Average rent for a one bedroom condo in Cocoa Beach and Cape Canaveral is $1200 a month and average selling price of these units is around $130,000. I have no idea how this will resolve as most everyone is still frozen in place with fingers crossed hoping for a miracle. I don't know if the number of affected renters will be enough to matter but at first glance it appears to be a possibility.

I would be interested in readers' thoughts and stories related to our coronavirus reality. Feel free to comment to this post or email me directly. All input contributes to our understanding.

"When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk."  __unknown