Too expensive! Florida’s most overvalued rental market in the United States
When Jamaican Shaneeka Robinson hopped on the first Jet Blue flight from New York to South Florida in June, she expected a smooth transition to her one-bedroom rental in Fort Lauderdale. She was fleeing the hustle and bustle in search of a better work-life balance.
When she reached it though, it was not what she had expected. “The place looked good, but there was no running water in the apartment. My landlord said he couldn’t rent the property anymore and it would take weeks to sort it out.
With this disappointment, Shaneeka rented an Airbnb room, hoping to find something soon. Two weeks later, she got a room at someone’s house for $800.00 in Plantation. It’s now September and the 27-year-old is still in the one-bedroom unit, trying to find an affordable house to rent.
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Shaneeka’s story of finding affordable rentals in South Florida isn’t unique. The cost of rental properties in the area has skyrocketed. Earlier this year, real estate economist Ken Johnson said ABC News that “the Miami Metro, which runs through Palm Beach County, costs about 30% above that long-term fare trip. Rental markets in Miami are about 22% above their long-term premium. This makes it the most expensive market in the country. »
In May, Bloomberg reported the findings of researchers from Florida Atlantic University (FAU) and Florida Gulf Coast University, who said “South Florida is the most overvalued rental market in the United States.” The report says renters are “paying 22% more than they should”.
And according to WPTVRealtor.com reported last year that “the Miami-Fort Lauderdale-West Palm Beach area is the nation’s third fastest growing rental market among metropolitan areas.”
But what makes the cost of renting skyrocket? The answer lies in the basic economic principle that prices will rise when demand exceeds supply. And when prices rise, consumers are forced to demand alternatives which also raise prices if there is less supply for the alternative.
There is an influx of national and international migrants in the region, and these people need housing. This demand has driven up house prices in the area as housing stock is low. Higher prices are causing buyers to demand more rental housing as alternatives, and with less supply of such housing solutions, rental prices are skyrocketing.
People move to Florida because of the great weather, cultural diversity, lower cost of living, and zero income tax policy. The New York Post reports that “21,546 New Yorkers have traded in for the Sunshine State” for the first four months of this year. This is a 12% increase over 2021 figures for the same period. 61,728 New Yorkers moved to Florida in 2021.
Florida was also the final destination of 38,590 immigrants, according to Census Bureau data, reported Florida politics.
Another factor that keeps housing solutions high is the impact of real estate investors. These buyers generally do not live in the purchased home. They are content to buy, repair and sell/rent, knowing that they can set high prices to satisfy market demand.
The impact of Airbnb activity also drove down rental inventory, causing a supply issue.
apartmentlist.com reports that rental prices in Miami are up 66% from last year’s rates, where a bedroom costs $2,700. If you need two bedrooms, expect to pay around $3,600.
In Fort Lauderdale, rents are up 41% year over year. One bedroom could cost you $1,975, and a two-bedroom is $3,024.
Seven of the ten highest rental prices in the state are in South Florida, based on the average rent according to floridapropertymanagement.com . The list includes:
- Boca Raton
- Fort Lauderdale
- miami beach
- Coral Gables
Estate agent Andre Barrett, who has been in the industry for 20 years, estimates the current rental challenge will continue for another 24-36 months. “Rentals are based on supply and demand. Currently, the supply is very short and the demand is very high. It’s strictly a matter of supply and demand, and I don’t see anything on the horizon that will affect supply in the near future,” he said.
He hasn’t had many rentals lately due to current market conditions. “It’s a very competitive market, and we need to make sure we pre-qualify the clients we invest our time in securing a property. It gets harder and harder over time,” he told CNW.
Since the market is in the hands of the owners, they have the power to decide who can rent their property. Barrett said that in some cases, landlords accept the higher down payment than the standard minimum tenants are used to. “There are landlords who will accept up to six months’ rent in advance as a condition sine qua non to rent their house. And in some cases, it is the potential tenant who makes the offer. Few people can pay several months’ rent as a deposit, but there are some who can. When an owner sees up to 50 bids, the best one wins,” he said.
But with this trend set to continue for the next three years, according to most experts, what can real estate agents tell their clients?
Barrett said he explains the market conditions and how an offer must be presented to be accepted. “We explain the reality of the South Florida rental market and how an offer should be structured.” He also tries to gather information from the tenant’s agent. “How many offers and screenings have they had? What is important for the owner? This is to try to assess the general climate of the situation.
The Barret Group CEO believes that for this situation to end, more inventory will be needed in the system. “We need more apartment complexes and more funding for housing programs to keep rents low for a while. The bottom line is more inventory.
For tenants facing hardship and eviction, there may be resources at the county and city governments to help.
The Palm Beach County Community Service Program is still accepting applications but is temporarily closed due to “high volume of applications,” according to the website. www.rentalassistancepbc.org/. The portal will reopen on October 3, 2022.
In Broward County, rental assistance is available from the Broward Emergency Rental Assistance Program. In May, the county received $22 million in federal funding to help those who are behind on rent or unable to pay.
Cities in Broward with specific rental assistance programs include:
If you live in Miami-Dade, the City of Hialeah has two programs to help you:
The Dade Housing Assistance Network (HAND) is one of many communities to receive the Emergency Solutions Grant (ESG) from the Department of Housing and Urban Development (HUD). The funds help individuals and families affected by the COVID-19 public health emergency. The city also has a Emergency Rental Assistance Program (ERAP) to help individuals.
Miami-Dade County has two programs that provide assistance to tenants:
The Emergency rental assistance (ERA) The program was closed on August 8 due to available funds, but they have requested more funding.
The county is accepting applications for its Emergency Rental Program 2.4 (ERAP 2.4)
Remember that there are requirements to get help from these programs and help is given as long as funding is available.
The Financial Protection Bureau (CFPB) offers advice and help on its website if you are facing eviction.