Across South Florida, some municipalities are experiencing a drop in apartment rents, marking a sharp turnaround from the tri-county region’s record rate hikes of recent years, a new report shows.
Although this comes as bad news for landlords and a welcome reprieve for cost-burdened tenants, the rent declines in some areas may not be indicative of a long-term region-wide trend, one expert cautioned.
Thirteen of 25 municipalities examined experienced a drop in rents for one-bedroom units over the past year, with Sunny Isles Beach leading the way with a 10.2 percent decrease, according to a Zumper report. Homestead had the second biggest decline at 5.3 percent, followed by North Miami at 4.6 percent, and Sunrise at 4.4 percent. The city of Miami also had a decline of 1.8 percent; Hallandale Beach, 3.6 percent; and Aventura, 2.4 percent.
The data took into account all types of rentals, including apartments, condos and townhouses.
South Florida’s hefty multifamily project deliveries in recent years have tempered demand and led to rent declines, according to Crystal Chen of Zumper.
Starting in late 2020, South Florida became a magnet for out-of-state transplants who moved here due to the early lifting of the lockdown, lack of a state income tax and weather. This led to unprecedented apartment demand, pushing up rents by record levels.
South Florida led the nation with a 58 percent hike in median monthly rent, which had reached an average of $2,988, for the two-year period that ended in March 2022, Realtor.com reported at the time.
Developers seized on the bonanza with plans for new projects. By the end of the first quarter of this year, more than 7,800 new units were completed in South Florida, according to RealPage. A Berkadia report shows that by the half-year mark, 9,840 units were completed.
Over 23,800 units are expected to be completed by the end of the year, marking the biggest number since 2002, according to Berkadia.
New supply, coupled with a slowdown in the influx of new residents, has calmed the market –– and rents. Yet, one real estate economist said he doubts South Florida will experience a significant, long-term rent decline.
“We are probably not going to see overall average rents go down,” said Ken Johnson, a professor at Florida Atlantic University in Boca Raton. “Rents are plateauing and leveling off. Maybe one market might go down dramatically, but that’s being driven by very local supply and demand conditions.”
By “very local” conditions, Johnson means that in some submarkets, landlords are trying to lease up any remaining vacancies and are offering discounts to attract tenants, he said. But South Florida rents won’t drop to pre-pandemic levels, said Johnson, who also is part of the team that puts together the Waller, Weeks and Johnson Rental Index.
Still, data sources aside from Zumper also show South Florida rents are dropping. Miami rents fell 3.8 percent over the past year, according to Redfin analysis. Realtor.com’s June report also showed the average South Florida rents hit $2,388 in June, a 4.3 percent decline, year-over-year.
The Waller, Weeks index shows that South Florida’s apartment market still is overvalued, meaning rents are higher than they should be. The May data showed the average rent is $2,806, a 3.9 percent premium over where it should be, at $2,701, according to the index.
Zumper’s report also showed that not all submarkets are posting a rate drop. Miami Gardens’ average monthly rent for a one-bedroom unit reached $1,700, up 4.3 percent, year-over-year. It was followed by Tamarac, where the average rent also hit $1,700, a 3.7 percent increase. Doral and Deerfield Beach each posted a 2.9 percent hike in their rents.
Rents remained flat in Miami Beach, Hialeah, Fort Lauderdale and West Palm Beach.
And despite some municipalities posting a rent decline, they still remained the most expensive South Florida areas. Miami led the region with an average monthly rent for a one-bedroom unit at $2,750, and Sunny Isles Beach ranked third with an average rent of $2,470. Miami Beach had the second highest rent in South Florida, at $2,600, Zumper’s report shows.