Although the rise in Florida rental rates cooled slightly last year, monthly rates still registered an increase and show no signs of going down. The explosion in population in the Sunshine State in 2022 and the acute housing shortage are the two main reasons behind the rising rates. As a result, analysts believe high rents are here to stay in Florida.
Continual rises in Florida rental rates
2021 saw rental rates skyrocket across the US. In Florida alone, they soared by 30%. 2022 told a slightly different story, with Florida rental rates rising by 3.9% in the year. However, since early 2021 they have experienced a steady upward trend.
Furthermore, a Florida Atlantic University study found that many average rental rates in Florida ranked among the most expensive in the country. Tenants in Palm Beach, Broward and Miami-Dade were particularly hard hit by spikes in rates, with monthly payments at an average of US$2,770 in December. Property in Southwest Florida had similarly high rents, particularly in metro like Cape Coral and North Port.
High rents to stick around in Florida
Unlike some parts of the US, such as Austin, Boise and Phoenix, all pandemic boom towns, Florida has remained on the upward curve. As a result, the state continues to experience surging demand for rentals, meaning that rates will keep rising at least during 2023.
“Florida continues to defy all expectations,” says the Zumper Annual Rent Report 2022. It revealed that rental rates for 1-bedroom properties rose in all metro areas except Tampa in Florida in December. This trend goes against the national tide of falling rates.
“Florida remains an enormous opportunity for multifamily owners and operators,” said Juliet Johansson, Chief Revenue Officer at Zumper. She reports that potential tenants “continue flowing into the state” and that they tend to prefer properties with high-end amenities such as pools and fitness centres.
Reason behind rises
Solid demand is one of the main reasons behind the continued rise in Florida rental rates. Most of this demand comes from high migration levels.
According to data from the US Census Bureau, Florida’s population grew by 1.9% in 2022, the highest in the country. This percentage translates to over 416,700 new residents, the equivalent of 800 people a day.
“I don’t think people will stop moving to Florida,” said Crystal Chen at Zumper. The report revealed that people who moved to the Sunshine State during the pandemic have stayed “even during the typically slow winter season”.
Resulting housing deficit
As a result, Florida has a huge deficit in rental housing. For example, the Florida Apartment Association estimates there’s a shortage of 7,000 homes in Palm Beach alone. In state terms, it calculates that 570,000 new rental units will be needed to meet demand from new residents by 2030.
Consequently, analysts believe that high Florida rental rates are here to stay. “It’s one thing for rents to slow, but another for rents to decline,” said Zumper.