The supply shortage in the US housing market continues to push rental rates upwards. In the latest uptick, rents rose by almost 20% in the year. The Sunshine State registered some of the highest increases in the country, reiterating the continuing potential for high returns from Florida buy-to-lets.
Surge in rental rates continues
Rents have been rising steadily since the start of the pandemic, but the increases gained traction during 2021. According to a recent report from Realtor.com, they rose by 19.8% in the year to January in 50 of the largest metro areas in the US.
The analysis of rental studio and 1 and 2-bedroom apartments found that rents increased by double-digits in January for the eighth month in a row. As a result, the average monthly payment stood at US$1,789.
Steepest price hikes in Florida
The Sunshine State registered the biggest rent hikes, with Miami rentals seeing an upward surge of 52.4%. The latest increase brings the average rate to US$2,895 a month.
Other Florida markets also saw enormous increases. In Tampa, rents rose by 37.5% in the year to January, bringing the average to US$2,070. And in Orlando, the increase was 34.8%, taking rental rates to a median of US$1,820. In Jacksonville, rents went up by over 25%.
All four metros are popular investment spots for Florida buy-to-lets and the latest rental figures reiterate the potential for return.
Studios increase the most
Realtor.com found that rental rates for studios saw the biggest increase of the three types of property. Monthly rents went up by 21% (the equivalent of US$256 more a month) to reach an average of US$1,476.
Rates for both 1 and 2-bedroom apartments rose by 19.2% in the year to January. The latest increase brings their average monthly rate to US$1,652 and US$2,000, respectively.
According to Danielle Hale, Chief Economist at Realtor.com, the latest increases mean that “tenants should prepare to spend more for less space in the current market”. She pointed out that rents went up by 7.2% in the year even in the slowest markets.
Trend set to continue
Several reasons lie behind the continual increases in rental rates in the US, including tight housing market supply and shifts in lifestyle preferences.
Inventory levels are currently rock bottom in the US, particularly in popular destinations such as Florida. For example, January figures for the real estate market show that supply for single-family homes dropped to just one month. And levels for condos properties in Florida weren’t much better – 1.2 months.
The Sunshine State also continues to attract relocators from the rest of the US drawn to the state´s pleasant climate year-round and low taxation. This added competition for housing is pushing rental rates upwards.
Potential for Florida buy-to-lets
While the latest rental figures are bad news for tenants, they are quite the opposite for investors considering a buy-to-let property in Florida. Analysts believe that inventory will be tight in the state for three to five years, a situation that will continue to put pressure on prices.
As a result, a buy-to-let condo will provide solid annual returns and furnish investors with a sought-after asset in today’s tight resale market.