ORLANDO, Fla. – Florida is a boom state when it comes to rental rates.
“I’m not shocked that rents went up. I am shocked by how much they went up,” said Ken H. Johnson, a real estate economist with Florida Atlantic University’s College of Business.
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Johnson uses Zillow’s Observed Rent Index to track rental trends across the nation’s largest metro areas. According to the latest data collected in June, 9 of the top 15 cities with the highest premiums are in the Sunshine State.
Miami-Ft. Lauderdale came in the top spot with the average rent at $2,848. Johnson’s research shows the average rent should be $2,361.53.
Orlando came in with the ninth highest premium with the average rent at $2,062 when it should be $1,808.75. Daytona Beach has the 10th highest premium with the average rent at $1,903 and the average rent should be $1,675.70. Melbourne came in with the 13th highest premium with the average rent at $1,974 and it should be $1,742.38.
“We’re highest in premium, near the highest in actual rent, year over year change we’re the highest,” Johnson said.
Johnson’s research also shows Florida has some of the most overvalued rental markets. The highest rent surge was in Ft. Myers with renters paying 29% more than they did in June 2021.
Orlando and Daytona Beach saw a 22% increase in rent year over year, while Melbourne saw a 21% increase, the study shows.
“We’re seeing this huge pent-up demand and supply unable to keep pace with that,” said Trinity Kutschinski, the director of public affairs for the Apartment Association of Greater Orlando.
Kutschinski said one reason for the rise in rent is more people moving to Central Florida and not enough units.
“And it’s put a lot of additional pressures on the market,” she said.
Kutschinski added the industry isn’t immune to record high levels of inflation and operational cost increases which also contribute to high rent rates. But she said there are signs the rental market is stabilizing.
“It will take time. I wouldn’t expect rents to drop again. I think the market is finding, it’s adjusting, it’s finding what that perfect price is at,” Kutschinski said.
Johnson also said a reason rent could start leveling off is because so-called “COVID refugees” are leaving. These are people who moved to Florida during the pandemic and worked remotely who are now returning home as restrictions are lifted across the country.
“Is this enough to make the rental crisis go away? No, but I think this departure of folks to other parts of the country, going back to where their permanent jobs (are) and where they’re going to be going into the office is helping slow down the rate of rent increases,” Johnson said.
Johnson cautioned that even though rent rates are expected to level out that doesn’t mean you will likely see a drop in your payments anytime soon. He said the only long-term solution to the rental crisis is building more units.
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