Study: Florida Rents Far Outpacing Past Leasing Trends
By Paul Owers | 03/22/2022Tags: Finance | Press-Releases | Real-Estate
Categories: Faculty/Staff | Initiatives | Research
FAU Economist Says Rent Control Doesn’t Solve the Problem
Rents for homes and apartments in four Florida markets have soared over the past year, forcing renters to pay well above long-term leasing trends, according to a new study.
Ken. H. Johnson, Ph.D., of Florida Atlantic University; Shelton Weeks, Ph.D., of Florida Gulf Coast University; and Bennie Waller, Ph.D., of Longwood University say the recent rental crisis in the Miami, Fort Myers, Tampa and Orlando metros likely sprouted from the COVID-19 pandemic.
As of the end of February in Miami, the state’s largest metro area that also includes Broward and Palm Beach counties, rents rose 32.12 percent from a year ago.
Miami renters were paying an average 18.98 percent premium – the difference between where rents should be based on past leasing history and where rents actually are now. The January premium for rents in Miami was 17.45 percent.
Rents also are much higher than their long-term leasing trends in the Orlando, Tampa and Fort Myers metros.
- Orlando rents are up 24.26 percent year over year and were leasing at a 10.66 percent premium at the end of February. In January, the premium was 10.27 percent.
- Tampa rents increased 28.06 percent in the past year, with a premium of 15.74 percent at the end of February, up from 15.13 percent in January.
- Fort Myers rents rose 31.84 percent year over year, with a February premium of 15.21 percent, down slightly from 15.24 percent in January.
A year ago, homes and apartments in all four markets were leasing for discounts -- below historical pricing trends.
“It’s clear that rent increases have become a major problem across Florida, threatening the livelihoods of middle-class consumers,” said Johnson, an economist in FAU’s College of Business who also studies home prices nationwide.
The good news is, the premiums in three of the four measured markets, while still significant, have started to slow.
“It’s entirely possible that Florida renters will face more moderate rent increases in the months ahead, although Miami still is a concern,” said Weeks, director of FGCU’s Lucas Institute for Real Estate Development & Finance. “Miami has huge international demand that may help keep rents rising.”
The recent rent spikes are unusual, the researchers said. Over the long term, rents tend to be less volatile than housing prices, which are more reactionary to external forces, such as mortgage rate changes.
“We believe rents started to skyrocket due to the pandemic,” said Waller, a visiting professor at FGCU. “Demand has risen sharply as more people moved to Florida to escape COVID-19 restrictions while at the same time supply has leveled off because developers struggle to build units due to supply chain shortages and increasing costs for materials.”
In analyzing Florida rents, the researchers used data from real estate portal Zillow, which produces a repeat-rent index that is weighted to the rental housing stock to ensure representativeness across an entire market, not just with those units currently listed for rent.
Some affordable housing advocates have called for rent control in Florida, a law that limits what landlords can charge tenants. But that isn’t a viable option, according to the researchers.
“It is well established by urban economists that rent controls create more problems than they solve,” Johnson said. “Rent ceilings typically lead to a smaller inventory of available units and lower overall property condition. It’s rare that a legislatively managed rent market can distribute a better set of available rental units than competitive market forces.”