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Florida rental prices remain overvalued despite relief in other states, study says

'I'm not surprised to see Florida still at the head of the pack, given the strong demand and severe shortage of units,' Ken Johnson says
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Posted at 1:04 PM, Nov 04, 2022
and last updated 2022-11-04 18:24:36-04

BOCA RATON, Fla. — The inflated costs to rent an apartment or home might be cooling off somewhat in the U.S. — just not in Florida.

Rental costs in the Sunshine State remain among the nation's most overvalued, according to researchers at Florida Atlantic University and two other schools.

The study released Friday said that Miami metro area, which includes Palm Beach County, leads the U.S. with renters spending 18.22% more than they should, based on past leasing price history.

Five other Florida markets are among the top 10 in most overpriced rental premiums:

  • Cape Coral-Fort Myers
  • Tampa
  • North Port-Bradenton
  • Orlando
  • Deltona-Daytona Beach

Nationally, the average rental premium at the end of September was 9.33%.

SPECIAL COVERAGE: Priced Out of Paradise

The average one-bedroom apartment in West Palm Beach is $1,750 a month, according to the real estate website Zumper.

Renter Stephen Mullen was among the lucky ones to find a deal on a home.

Palm Beach County renter Stephen Mullen
Stephen Mullen discusses what it's like renting a home in Palm Beach County amid the inflated prices.

"Right now we're paying $1,500, and that's for a two-bedroom, one-bath," Mullen said. "I'm not complaining."

However, his rent just increased by $200.

"But my co-workers' [rent has] gone up to $500 to $700 a month," Mullen said.

He said he's lucky his landlord isn't going by average market prices to tabulate his rent.

When it comes to the largest annual increases, the FAU study found that the Miami metro area again topped the list at 18.81%. In typical markets, rents increase only 3 to 5% a year.
Four other Florida markets rank in the top 10 for largest annual rent increases:

  • Cape Coral-Fort Myers
  • Deltona-Daytona Beach
  • Orlando
  • Palm Bay-Melbourne

Click here for the full rankings.

"It is clear from the data that rents across the U.S. are reverting back to a more normal long-term trend," Ken Johnson, a real estate economist at Florida Atlantic University. "But I'm not surprised to see Florida still at the head of the pack, given the strong demand and severe shortage of units."

Ken Johnson, FAU real estate expert
Ken Johnson explains why rental prices in Florida continue to stay high despite cooling down in many parts of the U.S.

Housing experts said that the long-term effects of Hurricane Ian on the southwest Florida rental market are unclear.

"But in the short term, it is reasonable to expect a continuation of our pre-Ian supply chain issues," Shelton Weeks, a real estate expert at Florida Gulf Coast University, said. "It most likely will be harder than ever to acquire materials and labor at reasonable prices, which will definitely exacerbate rental issues in this area of the state."

Johnson believes the impact of Hurricane Ian has contributed to rental prices not cooling down in Florida.

The researchers said they were encouraged by the national trends, despite Florida renters still suffering through these tough times.

"No one can say the rental crisis is over just yet, but it isn't getting worse, at least in some areas," Bennie Waller, a business expert at the University of Alabama said. "For example, the most recent average rent increase in Birmingham, Alabama was 8.36 percent, but four months ago the increase was 10.99 percent. So it's moving in the right direction."

The researchers said their study used leasing data from Zillow's Observed Rental Index to determine existing rents and statistically model historical trends from 2014.

Johnson said a variety of factors are contributing to rental prices staying high including more Airbnb rentals turning into long-term leases, snowbirds deciding to rent out their units more construction.