Renters in the Sunshine State are seeing the highest year-over-year rent increases, according to the latest Waller, Weeks and Johnson Rental Index.
In the monthly study, Florida Atlantic University (FAU) partnered with researchers at Florida Gulf Coast University and the University of Alabama to analyze U.S. rental markets and spotlight where the national rental surge is impacting residents the most. Researchers then ranked the 25 most overvalued U.S. rental markets.
The report found that Florida remains at the heart of a nationwide rental crisis, with 10 Florida metros placing in the top 25 most overvalued rental markets. Notably, Florida claimed the top 3 spots, with renters in Fort Myers seeing the nation’s largest increase. The average rent in Fort Myers, per the data, is $2,073, up 32.38 percent from a year ago.
Fort Myers was followed closely by Miami-Fort Lauderdale and North Port-Sarasota-Bradenton. Other markets in Florida to crack the top 25 include Tampa at No. 5, Port St. Lucie at No. 6, Lakeland at No. 8, Orlando at No. 9, Melbourne at No. 10, Daytona Beach at No. 11, and Jacksonville at No. 15.
In terms of the largest premium paid by renters, metro Miami (including Miami-Dade, Broward and Palm Beach counties) remains the most overvalued market at 22.07 percent. The average monthly rent in the Miami area climbed to $2,846, even though historical leasing figures indicate the average should be only $2,331.
The researchers say Florida has been hammered by spiking rents because demand increased during the pandemic while supply chain issues and rising material costs have hampered builders from adding supply. FAU noted that in some landlocked areas, such as Miami, finding available property to develop remains a major challenge.
“For some people, renting was the only way they could afford to live in Florida, and now that’s becoming a burden, too,” said Ken. H. Johnson, Ph.D., an economist in FAU’s College of Business. “I think you’ll see more renters take on roommates and cut back on eating out because it’s either that or they won’t be able to pay the rent.”
Johnson, Bennie Waller, Ph.D., of UA, and Shelton Weeks, Ph.D., of FGCU, started analyzing rental markets in Florida earlier this year before expanding the study nationwide. The trio used past leasing data from Zillow’s Observed Rental Index to statistically model historical trends from 2014 to compose the study.
“The way out of this is to add more rental units to the marketplace,” added Waller, of UA’s Alabama Center for Real Estate. “But it’s just not realistic to expect a bunch of new projects in the near term, given the supply chain problems and the often slow pace of government approvals facing developers before they can put a shovel in the ground.”
In the vast majority of the markets surveyed, rents are far above their long-term trends, but there is evidence that rent growth is slowing in some areas.
On a month-to-month basis, the average rent in 11 markets has declined slightly. Those areas include: Augusta, Georgia; Youngstown, Ohio; and New Orleans.
“Depending on the market, some rents may be stabilizing, but they’re still much higher than they were a year or two ago,” said Weeks, of FGCU’s Lucas Institute for Real Estate Development & Finance. “It’s incredibly painful for middle-class budgets.”
The full rankings can be found here.