The U.S. rental crisis appears to be softening, although Florida rents remain among the nation’s most overvalued, according to researchers at Florida Atlantic University (FAU), Florida Gulf Coast University (FGCU) and the University of Alabama.
Miami leads the U.S. with renters spending 18.22 percent more than they should, based on past leasing price history. Five other Florida markets are among the top 10 in most overpriced rental premiums: Cape Coral-Fort Myers, Tampa, North Port-Bradenton, Orlando and Deltona-Daytona Beach.
Nationally, the average rental premium at the end of September was 9.33 percent.
When it comes to the largest annual increases, Miami again tops the list at 18.81 percent. Four other Florida markets rank in the top 10: Cape Coral-Fort Myers, Deltona-Daytona Beach, Orlando and Palm Bay-Melbourne. In typical markets, rents increase only 3 to 5 percent a year.
Of the 100 measured markets nationwide, 38 posted month-over-month rental declines in September. El Paso, Texas had the largest decline at 1.96 percent.
“It is clear from the data that rents across the U.S. are reverting back to a more normal long-term trend,” said Dr. Ken Johnson., an economist in FAU’s College of Business, on Friday. “But I’m not surprised to see Florida still at the head of the pack, given the strong demand and severe shortage of units.”
Dr. Shelton Weeks of Florida Gulf Coast University’s Lucas Institute for Real Estate Development & Finance, said the long-term effects of Hurricane Ian on the southwest Florida rental market are unclear.
“But in the short term, it is reasonable to expect a continuation of our pre-Ian supply chain issues,” he said. “It most likely will be harder than ever to acquire materials and labor at reasonable prices, which will definitely exacerbate rental issues in this area of the state.”
Dr. Bennie Waller of the University of Alabama’s Culverhouse College of Business said he’s encouraged by the national trends.
“No one can say the rental crisis is over just yet, but it isn’t getting worse, at least in some areas,” Waller said. “For example, the most recent average rent increase in Birmingham, Alabama was 8.36 percent, but four months ago the increase was 10.99 percent. So it’s moving in the right direction.”
The researchers use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. The Waller Weeks & Johnson Rental Index covers the entire rental stock of homes and apartments.
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