Business

Overpriced! Florida most overvalued rental market in the U.S.

When Jamaican Shaneeka Robinson jumped on the early Jet Blue flight from New York to South Florida in June, she expected a smooth transition to her one-bedroom rental home in Fort Lauderdale. She ran away from the crowds in search of a better work-life balance.

However, when she arrived, it was not what she expected. “The place looked good, but there was no running water in the apartment. My landlord said he could no longer rent the property and it would take weeks to resolve the issue.”

With that disappointment, Shaneeka rented an Airbnb room, hoping to find something soon. Two weeks later, she got a room at someone’s home for $800 in Plantation. It is now September and the 27-year-old is still in the one-bedroom unit trying to find an affordable rental home.

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Shaneeka’s story of finding affordable rental housing in South Florida is not unique. The costs of rental housing in the region are skyrocketing. Earlier this year, real estate economist Ken Johnson told ABC News that “The Miami metro, which runs all the way through Palm Beach County, is about 30 percent higher than this long-term price trip. Miami rental markets are about 22 percent above their long-term premium. That makes it the most expensive market in the country.”

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In May, Bloomberg reported the findings of researchers from Florida Atlantic University (FAU) and Florida Gulf Coast University, who stated that “South Florida is the most overvalued rental market in the US.” should.”

And according to WPTV, Realtor.com reported last year that “the Miami-Fort Lauderdale-West Palm Beach area is the third fastest-growing rental market in the country among metropolitan areas.”

But what causes rental costs to rise? The answer lies in the basic economic principle that prices will rise when demand exceeds supply. And as prices rise, consumers are forced to demand alternatives that also raise prices if there is less supply for the alternative.

There is an influx of national and international migration to the area and these people need housing. This demand has caused the price of houses in the area to rise as the housing stock is low. The higher prices are driving home buyers to demand more rental units as an alternative, and with less supply of such housing solutions, rents skyrocket.

People move to Florida because of the beautiful weather, cultural diversity, lower cost of living, and zero-tax policy. The New York Post reports that “21,546 New Yorkers traded their driver’s licenses for the Sunshine State” during the first four months of this year. This is an increase of 12 percent from 2021 figures for the same period. 61,728 New Yorkers moved to Florida in 2021.

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Florida was also the final destination for 38,590 immigrants, according to data from The Census Bureau, Florida Politics reported.

Another factor that keeps housing solutions high is the impact of real estate investors. These buyers usually do not live in the purchased home. They buy, repair and sell/rent, well aware that they can set high prices to meet market demand.

The impact of Airbnb’s business has also pushed rental inventory down, creating a supply problem.

Apartmentlist.com reports that rents in Miami are up 66 percent from last year’s rates, where a one-bedroom apartment costs $2,700. If you need two bedrooms, expect to pay about $3,600.

In Fort Lauderdale, rents are up 41 percent year over year. A one-bedroom can cost you $1,975, and a two-bedroom will cost $3,024.

Seven of the top ten highest rents in the state are in South Florida, based on the average rent according to floridapropertymanagement.com. The list includes:

  1. Weston
  2. Boca Raton
  3. Fort Lauderdale
  4. Miami Beach
  5. Coral facades
  6. Doral
  7. Miami
  8. Tampa
  9. Orlando
  10. Jacksonville

Real estate agent Andre Barrett, who has been in the business for 20 years, believes the current rental challenge will continue for another 24 to 36 months. “Renting is based on supply and demand. Currently, the supply is very tight and the demand is very high. It’s strictly a supply and demand issue, and I don’t see anything on the horizon that will affect the supply side for the foreseeable future,” he said.

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He hasn’t rented much lately due to the 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 to secure a property. It gets more and more difficult with time,” he told CNW.

Since the market is in the hands of property owners, they have the power to decide who is eligible to rent their property. Barrett said that in some cases, landlords will accept the highest deposit over the standard minimum renters. “There are property owners who accept up to six months’ rent in advance as a qualification to rent their home. And in some cases, it is the potential tenant who makes the offer. Not many people can pay a few months’ rent as an advance, but there are some who can. When a landlord sees up to 50 offers, the best one wins,” he said.

But with this trend expected to continue for the next three years, how can brokers say to their clients according to most experts?

Barrett said he explains market conditions and how a bid must be submitted in order to be accepted. “We explain the realities of the South Florida rental market and how to structure an offer.” He also tries to gather information from the tenant’s agent. “How many offers and performances have they had? What is important to the landlord? This is an attempt to gauge the general climate of the situation.”

The CEO of the Barret Group believes that to end this situation, more inventory is needed in the system. “We need more apartment complexes and more funding for housing programs to keep rents low for some time. The bottom line is more inventory.”

For tenants facing hardship and eviction, resources may be with the county and city governments to help.

The Palm Beach County Community Service Program is still accepting applications, but has been temporarily closed due to the “high volume of applications,” according to the website www.rentalasstancepbc.org/. The portal will reopen on October 3, 2022.

In Broward County, rental assistance is available through the Broward Emergency Rental Assistance Program. In May, the county received $22 million in federal funding to help people who are behind on rent or unable to pay.

Cities in Broward with specific rental utilities include:

Lauderhill and Lauderdale Lakes

If you live in Miami-Dade, the city of Hialeah has two programs to help:

The Housing Assistance Network of Dade (HAND) program is one of several 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 an Emergency Rental Assistance Program (ERAP) to assist individuals.

The County of Miami-Dade has two programs that provide assistance to tenants:

The Emergency Rental Assistance (ERA) program was closed on August 8 due to available funds, but they have applied for more funding.

The province is accepting applications for its Emergency Rental Program 2.4 (ERAP 2.4)

Please note that there are requirements to get help from these programs, and help will be given as long as funding is available.

The Financial Protection Bureau (CFPB) offers advice and assistance on its website if you are facing eviction.

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