Florida Apartment Markets Experience Unusual Revenue Drop

In January, revenue change in Florida apartment markets experienced a surprising drop from the surges that market saw in 2021 and 2022, according to data from Realpage Market Analytics.

For context, 17 of the nation’s largest 150 apartment markets are in Florida. Those 17 markets saw revenues decline an average of 3.4% in the year-ending January. In contrast to the Florida market, the 16 California apartment markets in the top 150 saw revenues fall an average of 0.7%. At the same time, the 11 Texas markets experienced average declines of 2.6%. And US revenues were unchanged for the year.

Until recently, the state of Florida was seeing record high annual revenue growth, which peaked at close to 20% in February 2022.  This growth was largely due to the pandemic and its subsequent work-from-home trend. Many individuals relocated to small affordable beach towns in Florida during this time, which caused the rental housing market to explode. In response to this explosion, developers increased their construction pipelines. However, as inventory began to surge, revenues started to cool.

In addition to inventory changes, the Florida apartment market has also been hit by increasing insurance costs. In fact, Florida apartment markets have experienced some of the most extreme rising insurance costs. Among those areas hit the hardest in 2019 were Tampa, Miami, West Palm Beach, and Jacksonville.

Some of those small Florida beach towns that experienced demand increases in 2021 and 2022 are just now feeling the aftereffects of increased inventory growth. Consequently, they are some of the areas with the worst revenue declines in the past year. Cape Coral was Florida’s worst performer, with revenues dropping 12% in the past year. Declines were also significant, 7%-8%, in Naples, Deltona, and North Port. However, inventories were up in these markets by approximately 7%-11% in the past two years.

The only apartment market mentioned in the report that saw inventory grow by a small volume was Crestview-Fort Walton Beach-Destin at 3.1%. However, inventory growth in this small market was significant in the past five years at 8.9%, so the market is still absorbing stock.

While some of the smaller Florida markets experienced recent low revenue change, some larger apartment markets in the state reported less severe revenue declines in the past year. Since these larger markets are accustomed to inventory growth, they were not impacted as much as some smaller markets.