Real estate investors in the South who typically rely on an influx of snowbirds, or Northern residents who flock to the south for warmer weather, have been disproportionately affected this year as the snowbirds fail to arrive. The coronavirus pandemic and extended border closings between the U.S. and Canada are keeping millions away from sunshine and warm weather. Here's what the snowbird shortage means for investors.
What is a snowbird?
A snowbird is a person who migrates from the North to warmer climates like Florida, Texas, Arizona, Nevada, or other warm Southern states each winter. Primarily retired baby boomers from Canada and other cold northern states in New England and beyond, snowbirds spend anywhere from two to six months renting a property on a short-term lease or staying in their second residence riding out the cold winter months. Florida is one of the most popular snowbird destinations and gets an estimated $6.5 billion added to their economy from snowbird spending each year.
How has the coronavirus impacted their movements?
For a significant portion of 2020, travel restrictions and general hesitancy have slowed all travel regardless of destination, age, purpose, or economic circumstances. Since many snowbirds are considered at higher risk of contracting COVID-19 from an age standpoint, there is an even larger portion of them who have chosen to stay at home through the pandemic.
Travel within the U.S. from state to state is open, but a significant portion of the snowbird population comes from Canada. Florida received over 3.5 million Canadian visitors in 2019. Fourth quarter statistics for 2020 are still not in, but the state is down visitors by 34% so far this year. The Canadian government had a nonessential border travel ban in place until December 21, 2020, which prevented many Canadian residents from driving down like they normally would. Air travel was open, but many still feel it's safer to travel by vehicle than plane.
A new type of snowbird
The void left by traditional snowbirds has been compensated for, at least in some part, with an uptick in families switching up their routine and becoming "reverse snowbirds," or those who primarily live in Southern climates and venture North in the warm summer months. It's also pushed those who have been dreaming of making the move south “eventually” to speed up the process and buy property now. Remote work, virtual school, and lack of social engagements made the transition even easier than normal. This has motivated property owners interested in selling to benefit from increased demand and high real estate prices.
The pandemic has also allowed for snowchicks to make their way to the scene. This younger population, aged around 20 to 40, have decided to take advantage of working remotely to find a more appealing lifestyle and climate similar to the traditional snowbirds. Since the onset of the coronavirus, many workplaces have made the switch to working from home, which means as long as you have an internet connection and phone, you can be at work. The snowchicks realized they can make the same amount of money while sitting at their beachside condo rather than shoveling snow to get to work half the year and thus have begun migrating southward, creating demand for both short- and long-term rentals as well as sales of single-family homes.
The bottom line: Slowdown doesn't mean no opportunity
The typical snowbird rental market is feeling the pinch this winter with such a drastic decrease in normal visitors, but with vaccinations on the horizon, travel should be back to normal soon. Some investors may need to simply ride out the storm, but others may be ready to look for more reliable investments and want to consider switching to a long-term rental model or potentially selling the property to the reverse snowbirds or snowchicks as a way to cut losses and start generating cash flow again.