“Two Florida markets hampered by dramatic rent increases over the past year finally appear to be getting relief, but much of the nation remains in the cross hairs of a crisis, according to the latest monthly analysis by researchers at Florida Atlantic University and two other schools.
In July, Fort Myers and Miami continued to lead the U.S. in the largest year-over-year rent increases at 25.22 percent and 24.61 percent, respectively. But over the past six months, Fort Myers’ average rent rose only 7.05 percent, while Miami’s average was up just 8.39 percent, indicating the worst of the rent hikes occurred more than six months ago.
“Annual rent growth in these two areas is coming back in line with traditional increases, so renters renewing leases aren’t as overwhelmed as they were last year,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “Regardless of these shifts, consumers across the country look to be in for a prolonged period of unaffordable rental prices.”
Along with Fort Myers and Miami, Sarasota-Bradenton, Jacksonville and Port St. Lucie have benefited from cooling rents over the past six months. But other parts of Florida and markets across the nation haven’t been as fortunate.
In Knoxville, Tennessee, the average rent rose 12.29 percent, up from 7.67 percent in the six months prior. On a six-month basis, rent gains also have increased in New York (10.52 percent vs. 8.55 percent) and Charleston, South Carolina (10.16 percent vs. 6.18 percent).
“In these metros, rents are escalating far beyond normal rate increases, with no sign of a let-up,” said Shelton Weeks, Ph.D., of Florida Gulf Coast University’s Lucas Institute for Real Estate Development & Finance.
Johnson, Weeks and Bennie Waller, Ph.D. of The University of Alabama, use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. The Waller, Weeks and Johnson Rental Index covers the entire rental stock of homes and apartments.
The July rankings show that Florida markets have eight of the 10 largest annual rent increases in the U.S.: Fort Myers; Miami; No. 4 Sarasota-Bradenton (19.71 percent); No. 5 Daytona Beach (19.69 percent); No. 6 Port St. Lucie (19.42 percent); No. 7 Orlando (19.25 percent); No. 9 Melbourne (18.79 percent); and No. 10 Lakeland (18.66 percent).
Traditionally, rents have increased only 3 to 5 percent a year, an indication of how far off the norm recent increases have been.
Florida also dominates the rankings of the largest rental premiums – the percentage above the area’s long-term rental trend that renters must pay. Miami leads the nation at 21.07 percent, followed by No. 3 Fort Myers (18.61 percent); No. 4 Sarasota-Bradenton (17.48 percent); No. 5 Tampa (16.77 percent); No. 8 Daytona Beach (15.19 percent); No. 9 Lakeland (15.04 percent); and No. 10 Port St. Lucie (14.98 percent).
“Population movements and rental-unit shortages appear to be the two big drivers of rent increases,” said Waller of UA’s Culverhouse College of Business. “Simply put, folks are moving to areas that are lagging in the development of rental units. The resolution will probably take some time as the lag in inventory supply catches up in the Sun Belt states.”