Tenants are still paying hundreds of dollars more than the average rent across South Florida — a region with one of the highest rent premiums in the country, according to a recent rent analysis.
The Waller, Weeks and Johnson Rental Index, which tracks rental market trends across the country’s largest metropolitan areas, found the average rent in Miami to be $2,817. But the average rent price should be $2,578, leaving Miami with a rent premium of about 9.3%.
The rental index is an analysis by researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama. It tracks how much renters are paying, comparing it to where rents should be based on long-term trends. The rent in the greater Miami/South Florida region is more than $200 than where it should be.
Is there any relief in sight? Rent prices will continue to go up between 3% to 5% each year for the next few years, according to Ken H. Johnson, a real estate economist at FAU’s College of Business.
“You’re going to see more people living together to fight this, and to fight this unaffordable nature of housing right now,” he said. “You will see just more people people per unit living together. … ‘The Odd Couple’ or ‘The Golden Girls’ situation, where unrelated people come together to live, to help be able to afford unaffordable housing.”
The highest rent premium in the United States belongs to Charleston, South Carolina, at 10.7%. Miami holds the fourth-highest premium in the nation, according to the index, with Knoxville, Tennessee, and New York City bearing higher numbers, at 10.3% and 9.8%, respectively.
Johnson said while the 9.3% figure accounts for the entire South Florida region, rents are still typically higher in the city of Miami.
Seeing demand for apartments
Population growth in Miami is slowing, while Broward, Palm Beach, Martin and St. Lucie counties are projected to experience considerable rises in population, he said. “It’s almost like rolling up a tube of toothpaste,” he said. “The expected growth, it’s moving north.”
Developers go where the population goes, and increases in housing availability will eventually help ease the increase in rent prices, Johnson said.
Other factors, such as increases in income and future multi-family housing options ushered in by the state’s Live Local Act, which provides funding to create more affordable housing opportunities, also may help in creating a rental market where prices are more stable.
“Rents will go up slower and slower, and we’re already seeing it,” Johnson said. “There’ll be a time where we will be renting at a discount again in Miami metro, I just think that’s several years over the horizon.”
Scott Gerow, the executive director of luxury sales at the Cotilla-Beresh-Gerow Luxury Team at Compass, agrees rents will not go down, but they will maintain.
Higher housing supply helps cool the rapidly rising rental markets, but that still is not enough to reduce prices, Gerow said.
“I don’t see a dramatic decrease by any means,” he said. “It really comes down to supply and demand, as we always say, whether it’s sales or rentals, the more inventory, more supply, obviously, the lower the premium.
“But when there’s a really captive rental audience, and people that are really aggressively renting and trying to be in South Florida, then obviously the inventory decreases.”
But Gerow does not think the area’s high rent prices are enough to deter the floods of people moving to the area.
“I don’t see really anything on the horizon that will stop people from coming to South Florida from the high tax states or the cold weather states,” he said. “What we continue to see is a pipeline of continuous momentum and people coming here.”
South Florida residents must wait until premiums lower, incomes rise and more units are built to stop holding their breath each month.
“We are trending back toward normal,” said Bennie Waller, a real estate expert at the University of Alabama’s College of Business, in a statement. “Patience is in order, but we have probably heard the end of calls for rent control.”
