Rent Growth Normalizes as Florida Faces Prolonged Affordability Crisis
Renters across Florida are faced with a prolonged affordability crisis despite rent growth having returned to normal, according to researchers at Florida Atlantic University and two other schools.
Renters across Florida are faced with a prolonged affordability crisis despite rent growth having returned to normal, according to researchers at Florida Atlantic University and two other schools.
Rent growth for the most part has returned to normal in Florida, with most of the measured metro areas in the state seeing rent growth at or below the national average, according to August numbers from the Waller, Weeks and Johnson Rental Index.
Orlando saw the smallest year-over-year increases at 1.10 percent, followed by Jacksonville, 1.31 percent; Lakeland, 2.08 percent; Palm Bay, 2.33 percent; Tampa, 2.69 percent; Miami, 2.83 percent; Deltona, 2.99 percent; North Port, 4.02 percent; and Cape Coral, 6.90 percent.
Rent growth on a national level for August reached 3.25 percent year-over-year.
“This is indicative of the rental market returning back to normal as rent usually increases by three to five percent in a typical year. Even our premiums are normalizing,” said Ken H. Johnson, real estate economist with FAU’s College of Business. “However, we are entering a new normal where overall rents are high, and renters are left with a prolonged affordability crisis.”
The Waller Weeks and Johnson Rental Index, part of FAU’s Real Estate Initiative, measures where the average rent is in the 100 most populated metropolitan areas in the United States and compares it to where rents should be based on historical rental pricing trends. Johnson, along with fellow researchers, Shelton Weeks, Ph.D., of Florida Gulf Coast University, and Bennie Waller, Ph.D. of the University of Alabama, also measure average yearly increases, monthly increases and how much money the typical household needs to make to avoid paying more than 30 percent of their income towards rent.
Despite rent growth returning to normal, overall rents remain high, making it difficult for the typical renter to afford a place to rent as incomes have not kept pace. In Miami, the typical household needs a salary of $111,914 to avoid being house poor, or paying more than 30 percent of their income to rent. In North Port, the salary needed is $94,817; Cape Coral, $90,916; Tampa, $86,659; and Orlando, $83,486.
“Some people may end up leaving the area due to these costs, but it won’t be enough to balance out the influx coming into the state. Florida has a vibrant, expanding economic base that will continue to draw people in, most likely preventing rents from falling,” Waller said.
Renters in Florida are unlikely to see relief until enough housing is built to meet the intense demand and combat the low supply.
“Typically, in a housing cycle, there is a balance between the number of roofs to live under and own plus the number of roofs to live under and rent,” Weeks said. “Until we build enough roofs to rent and own to address the severe supply shortage, there will be chaos in the rental and housing markets, which could take years to address.”
-FAU-
Tags: real estate | College of Business