Melbourne Beach short-term rental growth trend

The real estate market has been busy in the last year. In the 12-month period from September 2023 to August 2024 there have been 90 property sales within the Town of Melbourne Beach. Six of these properties are now known short-term rentals (STR). You may not have seen them appear in your neighborhood as STR growth is not evenly dispersed throughout Town. Some neighborhoods are are experiencing higher rates of STR growth than others. A noteworthy example of recent STR growth is the second block of Cherry Drive. In the first 10 months of 2024, four of the 20 houses in the second block of Cherry Drive were sold to new owners. Two of these recently sold properties are already STRs and there are indications a third will become a STR. Only one of these recently sold properties is owner occupied. Another house in the second block of Cherry Drive is the infamous unregistered party house STR at 204 Cherry Drive. It’s currently for sale and will most likely be a STR again after it is sold to a new owner.

Fully 20% of the houses in the second block of Cherry drive are or likely will be STRs. On First and Second Avenue there are three homes with STRs on all three sides of them!

Here is our analysis of the 90 properties sold within the Town of Melbourne Beach from September 2023 to August 2024:

  • 64 are single family residences

  • 26 are condos or townhouses

  • 6 are known STRs (registered with the Town and/or advertised)

  • 6 were purchased by LLCs. These properties likely are or will be short or long-term rentals

  • 8 were purchased by buyers who own 2 or more other properties in Town or elsewhere in Brevard. These properties likely are or will be short or long-term rentals

  • 13 were purchased by buyers with a different mailing address and no other property in Town or Brevard. These buyers are likely a mix of snowbirds, residents, and investors

  • 8 were purchased by buyers who own one additional property in Town or Brevard. These buyers may be residents with an unsold former property

  • 49 were purchased by buyers whose mailing address is the residence address and who own no other property in Town or Brevard. These buyers are residents.

While this is too small a sample to draw valid statistical conclusions from, we and other citizens in Town are concerned that investors are driving up housing prices so we analyzed these property sales to see if there was a correlation between the type of buyer and the median* price paid. We found:

  • The median price/square foot paid by investors for single family residential properties is 3.2% higher than price paid by residents**

  • The median price/square foot paid by investors for condo & townhouse properties is 21.8% higher than price paid by residents**

Because investors may be willing to pay more for properties, realtors and property sellers have an incentive to find investors (instead of families) to purchase the property.

* The median is the middle value in a list ordered from smallest to largest.

** The reason 21 property sales were excluded from these calculations is because the buyer’s intent was not obvious. 13 were purchased by buyers with a different mailing address and no other property in Town or Brevard. 8 were purchased by buyers who own one additional property in Town or Brevard.