WEST PALM BEACH, Fla. — It's no secret that rent prices in the Palm Beaches and Treasure Coast have priced many residents out of paradise.
We've learned that fast-climbing rent prices will eventually plateau, but for now, the market remains at the mercy of those willing to pay top dollar.
Florida was the ultimate destination for Szeminda Siklodi. She grew up in Romania, but she planted her roots in South Florida years ago while working as a flight attendant.
For the last four years, she's called an apartment complex in Palm Beach County home.
"I live alone and it's very, very important to live in a safe area," she said.
She said she's a quiet renter who pays on time for her two-bedroom, two-bath unit in a gated community.
When her lease ended in March, she was startled to learn that her rent of $2,300 was going up from $1,075 to $3,475.
"I cried for two days," she said.
She decided to pay hundreds more in additional month-to-month fees while she searched for a new place to live, but it's been difficult finding anything that outweighs her current living situation.
"I am thinking to leave or stay or I don't know," she said.
Dean Dr. Brian Strow at Palm Beach Atlantic University's Rinker School of Business said this is a timely topic in classrooms.
"There are 335 million people buying and selling goods and services any given day, so that's a lot of iterations to make it complicated," he said.
There is currently a low supply of rental homes and a high demand. It's all a symptom of our area's success. People who are capable of paying the rental costs are moving to South Florida.
"People are saying, 'The rents are so high, nobody can afford those.' But the opposite is actually true. So many people can, and are willing to afford these rents," Strow said. "Demand is so high to live here, that that's why rent prices are going up. We saw in 2021, 12,000 net jobs added to Palm Beach County, so it's 12,000 more workers than we had the year before."
Real estate information company CoStar sent WPTV vacancy rates for Palm Beach County and the Treasure Coast.
All areas have fewer vacancies than they did in the first quarter of 2019.
Vacancy Rate – Source CoStar
- Palm Beach - FL: 2019 Q1 — 6.4%; 2019 Q2 — 6.9%; 2019 Q3 — 6.7%; 2019 Q4 — 6.7%; 2020 Q1 — 7.9%; 2020 Q2 — 8.2%; 2020 Q3 — 7.4%; 2020 Q4 — 7.7%; 2021 Q1 — 6.2%; 2021 Q2 — 4.8%; 2021 Q3 — 3.5%; 2021 Q4 — 4.2%; 2022 Q1 — 4.5%
- Port St. Lucie - FL: 2019 Q1 — 5.7%; 2019 Q2 — 6.1%; 2019 Q3 — 6.1%; 2019 Q4 — 4.6%; 2020 Q1 — 3.7%; 2020 Q2 — 5.3%; 2020 Q3 — 6.8%; 2020 Q4 — 4.5%; 2021 Q1 — 2.5%; 2021 Q2 — 3.9%; 2021 Q3 — 3.8%; 2021 Q4 — 3.6%; 2022 Q1 — 3.4%
- Sebastian-Vero Beach - FL: 2019 Q1 — 1.6%; 2019 Q2 — 1.5%; 2019 Q3 — 1.5%; 2019 Q4 — 1.8%; 2020 Q1 — 3.2%; 2020 Q2 — 3.2%; 2020 Q3 — 2.5%; 2020 Q4 — 1.9%; 2021 Q1 — 1.5%; 2021 Q2 — 1.0%; 2021 Q3 — 0.8%; 2021 Q4 — 0.6%; 2022 Q1 — 1.1%
- National: 2019 Q1 — 6.3%; 2019 Q2 — 6.1%; 2019 Q3 — 6.2%; 2019 Q4 — 6.5%; 2020 Q1 — 6.7%; 2020 Q2 — 6.7%; 2020 Q3 — 6.7%; 2020 Q4 — 6.6%; 2021 Q1 — 6.1%; 2021 Q2 — 5.1%; 2021 Q3 — 4.7%; 2021 Q4 — 4.8%; 2022 Q1 — 4.9%
Strow points out that landlords are facing price increases.
"As property goes up in terms of price, whether it's a house or apartment complex, the only way that an owner of an apartment complex can recoup those costs of higher real estate prices is to pass that cost on to the renters in terms of higher rent," Strow said.
Landlords who couldn't evict tenants during the pandemic have bigger bills.
"Before we pick on property owners for making too much money now, remember they took a substantial hit, more than other sectors in the economy during the recession," Strow said.
WPTV has heard from several local renters who said as they've been slapped with significantly higher rents, they've witnessed neighbors moving out en masse.
Strow said if an individual owner overshoots what the new, incoming tenants will be willing to pay, there can be a point where too many vacancies would force them to rethink a sharp increase.
"Sure, some will overshoot, so you'll get individual examples of someone shooting up too high and having a little higher vacancy rates, but they'll readjust, recalibrate, potentially lower their rental price because it's expensive for them," Strow said. "If they could have a really good renter in there to pay, it's not in their incentive to let it sit vacant."
He said that the bad news for renters is that prices won't be going down overall. You can expect them to stay high or climb in the short run but to eventually plateau.
"At the current pace, it is an unsustainable rent increase environment, so no we're not going to see another 57% increase year over year in rents like we did last year," Strow said. "That being said, I don't really foresee a correction downward. I don't see the rents going down, so the best we can hope for is a bit of a plateauing."
On the positive end, Strow said in the long run more housing options will be built.
"If we see rental prices going up, that sends as a big, neon, blinking light to home builders, to apartment builders, 'Hey, we need you. We want you to go build a new apartment, a new condo complex, a new house,'" Strow said. "And you're going to get paid handsomely to do that."
Strow said some of his students have tried to negotiate with landlords, offering to do yard work and maintenance at a home in exchange for keeping rent prices lower. It has worked in some cases but not in others.
Meanwhile, Siklodi continues to weigh her options about staying in her current apartment.
"I'm happy to live here," Siklodi said. "This is my home."
ADDITIONAL HOUSING RESOURCES
- County-by-county resources for renters facing eviction
- OUR Florida - Emergency Rental Assistance Relief Program
- Palm Beach County Department of Housing and Economic Development
- Palm Beach County Community Services
- Boca Raton
- St. Lucie County
- Martin County
- Indian River County
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