Some Florida Markets Start Hitting the Brakes on Rents

Many multifamily markets continue down the path of least resistance to rent growth, according to the latest in a monthly series of studies from researchers at Florida Atlantic University, Florida Gulf Coast University, and the University of Alabama. The combination of well-documented demographic shifts and just as well-known lack of rental housing seem to be the dual big drivers.

The Fort Myers and Miami markets still had the largest year-over-year rent increases, at 25.22% and 24.61% respectively. And yet, those are two showing at least some slowing of the pace. In Fort Myers, rents were up only 7.05% in the last six months, while Miami showed 8.39% growth, so the biggest jumps were from before then.

“In Knoxville, Tennessee, the average rent rose 12.29 percent, up from 7.67 percent in the six months prior,” according to a press release about the report. “On a six-month basis, rent gains also have increased in New York (10.52 percent vs. 8.55 percent) and Charleston, South Carolina (10.16 percent vs. 6.18 percent).”

In such places, there’s no let-up in the growth of rent. There are too many people looking to rent too few places. The more traditional rent growth rate would be from 3% to 5% a year. But in many places that’s a pipe dream

Florida had eight of the ten metros with the largest percentage increases: “Fort Myers; Miami; No. 4 Sarasota-Bradenton (19.71 percent); No. 5 Daytona Beach (19.69 percent); No. 6 Port St. Lucie (19.42 percent); No. 7 Orlando (19.25 percent); No. 9 Melbourne (18.79 percent); and No. 10 Lakeland (18.66 percent).”

“Florida also dominates the rankings of the largest rental premiums – the percentage above the area’s long-term rental trend that renters must pay,” the report added. “Miami leads the nation at 21.07 percent, followed by No. 3 Fort Myers (18.61 percent); No. 4 Sarasota-Bradenton (17.48 percent); No. 5 Tampa (16.77 percent); No. 8 Daytona Beach (15.19 percent); No. 9 Lakeland (15.04 percent); and No. 10 Port St. Lucie (14.98 percent).”

These types of leaps into stratospheric pricing raise the question of how long such trends can continue. Incomes aren’t matching the increases and eventually something has to give. At what point does the combination of transportation, food, clothing, healthcare, and other necessities become a figure so large that people can’t afford to live and must find yet somewhere else? Then what happens to rents? And to building values?