When COVID-19 hit the US in 2020, many real state owners in “leisure” focused cities were the ones who got most nervous. The two best examples of such markets with the highest concentration of "Accommodation and Food Services" employment are Orlando, FL, and Las Vegas, NV.
Below is the trend chart that shows the total number of domestic air travelers, which are the major source of their leisure businesses.
It is notable that both cities' domestic traveler numbers decreased significantly starting from Jan 2020, which was the beginning of COVID-19 spread in the US. The numbers bottomed in April 2020, when the pandemic became serious. However, the numbers started to bounce back starting from late 2020 and fully recovered by July 2021. Since that point, the numbers have exceeded the pre-COVID level.
To understand how these changes in domestic traveler numbers affected local job markets, below is the historical trend chart of unemployment percentages in the two markets.
The unemployment started to hike beginning from February 2020, one month after the domestic air travelers number started to decrease. The rate peaks in July 2020, approximately 3 months after the domestic air traveler numbers bottomed. Then the unemployment rate starts to recover from late 2020 as well. The unemployment rate for Orlando fully recovered to the pre-COVID level, whereas Las Vegas' rate is still slightly higher than the pre-COVID level.
Finally, to analyze how these volatility in local job markets affected the residential property values, below is the historical trend chart of residential properties including multifamily, single-family, and condos.
Surprisingly, the loss in domestic traveler numbers which led to a spike in the unemployment rate seems to have minimal impact or no impact at all on local residential values.
Here is the analysis and conclusion:
It is true that leisure businesses that are represented by "Accommodation and Food Services" employment tend to get more volatile by external market events such as COVID-19.
However, the sector relatively bounces back quicker than other traditional office employment, as it requires less "match-making" process between the employer and employee. There are pros and cons of these leisure-centric markets.
Many people wanted to get out of their homes and travel since they were not able to do so for about 2 years due to the pandemic, which led to even more increased numbers of travelers in the post-pandemic era.
Residential properties including multifamily and single-family rentals are the least cyclical asset types out of all real estate asset types. As proved by the above housing value trend chart, it was minimally affected by the volatility in job markets.
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