South Florida isn’t likely to face as many steep rent hikes, study says

Rents are no longer soaring in South Florida: While costs remain high, a drastic surge in rental prices is not expected any time soon, according to a recent study.

The study, from researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama, illustrates how rent growth in South Florida and other major cities in the state fell below the national average.

“You’re not going to see rents jump again, apartments, homes, condos, whatever, you’re not going to see the significant jumps in rent price for the foreseeable future,” said Ken H. Johnson, a real estate economist at FAU’s College of Business. “We expect to see rents return to their additional long-term rent pattern. … We should get back to that and stay on that path for quite some time.”

National rents increased by about 3.6% annually, but in the Miami-metro area, which includes Miami-Dade, Broward and Palm Beach counties, the rent increase was about 2.8%, according to the Waller, Weeks and Johnson index.

In other big cities, such as Tampa and Orlando, rents increased by even less, at about 2% and 0.9%, respectively.

Meanwhile, rent growth was nearly 8% and 9% in some Northeastern U.S. cities, such as Syracuse, New York, and Springfield, Massachusettes, the researchers found.

“For the most part, the measured metros in Florida are getting back in shape in terms of annual rental increases and slowly returning to their historic pricing trends,” Johnson said in a statement. “Rent growth is significantly below the national average, suggesting that Florida may no longer be the epicenter of the nation’s rent crisis.”

What’s leading to this slowdown? Rising inventory, mostly.

“The development of multi-family units in the Southeast, in particular in Florida, is what’s allowing us to see rents to flatten out,” Johnson said. “In other words, we’re building enough, finally.”

Construction costs are often sky-high, which could be a barrier to continued development, but demand is high, too, especially as people and businesses continue flocking to South Florida.

In September, inventory was low across the entire tricounty area, with the Miami Association of Realtors reporting that the monthly historical average of existing inventory, excluding new construction, was higher than the current inventory in each county. But supply has since picked up, Johnson said.

“The rental market would be considered stable just because you haven’t seen much of a change year-over-year,” said Karl Fong Yee, the owner and founder of the Advyzors Group with the Keyes Company, a real estate company operating primarily in South Florida.

Like Johnson, Fong Yee also attributes this stability to inventory increases.

“The advantage that our market has is just the attraction of our state, our market, the positive things that we have with job growth, more companies are establishing themselves down here,” he said.

Though the pace of rent growth is slowing, the household income required to comfortably afford the typical rental unit is still high. For a South Florida household of any size to avoid giving more than 30% of their income to rent, they have to make more than $100,000 year.

“Many renters will continue to make sacrifices to keep roofs over their heads until incomes rise,” Johnson said in a statement.