More Homes And Increased Competition Bring Orlando Vacation Rental Rates Down

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The massive vacation home building projects of the last two years are taking their toll on rental home profitability. Owners are reducing rental rates to unprecedented levels in the scramble for bookings.

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Until last year most owners of short-term vacation rental homes in Central Florida were able to cover the costs of ownership from their rental income. The 15,000 plus rental home industry, long supported by the British enthusiasm for investing in Florida real estate, was holding its own.

Then came the boom, which is now being followed in many cases by the bust. One of the first rental home support sites, Florida vacation rentals has been following the changing fortunes of the thousands of owners, many from overseas, who bought their own 'place in the sun'.

A major upwards correction in home values in the Orlando area in the last two years has seen builders rushing to meet frantic buyer demand by getting new vacation home developments off the drawing board and onto the ground. Buyers were standing in line at on-site sales offices to hand over their money. Some developers were holding sweepstakes to allocate lots as they were released.

But now this has all changed. The increase in rental home inventory has started to outstrip demand for bookings. British renters still come in large numbers, but the domestic market for vacation homes is slower to develop than many had hoped. The result is that too many home owners now scramble for too few bookings, aided by site like Orlando vacation homes. A target of 40 weeks of bookings a year, which was the industry standard a short time ago, is now an unrealistic dream for all but the most inventive owners.

Discouraged by the need to subsidise their mortages and running costs from their own pockets, a lot of owners are claiming their capital gains by selling up, often to residential buyers. Communities that focus on short term rental homes are already a sea of 'for sale' signs. This will take some of the pressure off in the longer term, but it will be a slow process until more buyers come back into the marketplace.

Other owners are clinging on for now, dropping rental rates below a strictly economic level in an effort to generate enough income to weather the storm until the market stabilises. Rental rates have always been competitive with hotel rooms, and, because of the facilities and flexibility, rental homes have always represented an excellent option for families on vacation.

The value of renting a privately owned vacation home in the area around Walt Disney World has never been greater, with rates as low as $100 a night becoming easy to find for a 4 bedroom home with its own heated pool. A family, or even two families traveling together, can rent a large home for the price of a single hotel room of an equivalent standard. Book late, and even greater bargains can be had, with with bonus features like free pool heating on offer, on late availability sections of websites like Orlando vacation rentals.

These are difficult times for owners, although eVilla Rentals' view is that this is only a temporary downturn in what is still a fundamentally sound investment in real estate. Meanwhile, vacationers can reap the benefits and get the ideal base for their stay in Orlando at a bargain basement price.


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Denis Le Marchant-smith
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