From 2020-2022, the United States experienced a significant increase in rental property prices, particularly in Florida. Suppose you were a Florida rental property owner during that time frame. In that case, you may have experienced an almost effortless renting process with high prices that left you with an exceptional amount of money in your pocket or the ability to pay off your mortgage.
Compared to the record-breaking rental rates over those two years, it’s become difficult for those property owners who expect their properties to rent for these same high rates.
As 2023 nears the end, the question is, “Are rents going down in Florida?” And the simple answer is yes. But why? Let’s dive into it.
What Factors Affect the Rental Market?
As we know, rental prices in Florida have drastically changed since 2020. This change didn’t spark randomly; many factors affect the fluctuation of rental rates.
Some factors that affect the rental market include:
- Economic Conditions
- Population Growth
- Natural and Environmental Factors
- Available Rental Inventory
- Cost to Own/Purchase
- Government Policies
- Cultural and Social Trends
Why is Rent in Florida So High?
As many of us know, one of the most significant factors in the Florida rent spike was the COVID-19 pandemic. While most states remained strict with COVID restrictions in 2020 and throughout 2021, Florida was more lenient than most. Florida was one of the few and first states operating almost normally throughout the global pandemic. While states like New York were shut down and experienced a mass exodus, Florida experienced the opposite.
According to The New York Post:
- The Big Apple’s population is 5.3% lower than when the novel coronavirus first hit the country. Over 468,200 people fled the city between April 2020 and July 2022.
- The state of Florida gained more than 655,200 people between 2020 and 2022.
Florida’s rent has increased significantly because of the large number of people who moved to the state between 2020 and 2022. However, in 2023, we are seeing these statistics change.
Are Rents Going Down in Florida?
Statistics show that rents across Florida have decreased over the past year. National single-family rents have fallen for 15 consecutive months, according to DSNews.
Now, does this mean rent in Florida is cheap? Not necessarily. However, property owners and landlords must note that listing your property at the same price as a year ago will not be beneficial. As rent has decreased for 15 consecutive months, we encourage property owners to re-evaluate their listing prices.
Rent prices across the country are adjusting from their record high. However, Florida is one of the states with the most significant decline in rental rates this past year.
According to rent.com:
- Rents in Florida have decreased -4.15% year over year.
- Tampa’s rent has decreased -.96% year over year and -3.38% month over month, with a median rent of $2,162.
- Orlando’s rent has decreased -1.99% year over year and -.04% month over month with a median rent of $2,110.
Why is Rent Going Down in Florida?
Since multiple factors affect rental rates, there are numerous reasons rent is going down in Florida.
Less Remote Work
As time progresses further away from the beginning of the COVID-19 pandemic, the rate at which people are moving to Florida has begun to decrease. From 2020-2022, the amount of people relocating to Florida was astronomical. The mass migration of people resulted in a high demand for rental properties, allowing property owners to hike up the prices of rent.
During these two years, most people in the country worked from home, enabling them to live in one place while working a job headquartered in another state. In 2023, we’ve seen the shift back to in-person working, which leaves less flexibility for relocating. Many digital nomads are out of luck, as major metropolitan cities like New York, Los Angeles, and Chicago have resumed office operations and in-person duties.
As a result of the end of the pandemic, “Annual single-family rent growth has returned to its long-term, pre-pandemic rate.”
Florida has become one of the most moved-to states in the nation over these three past years. As more people move and the rental rates increase, living costs become less affordable.
While living costs become more expensive, Florida wages have not fluctuated to accommodate the expenses. Florida’s minimum wage just rose to $12, which is far too low to afford the median price of rental properties throughout the state.
For someone working 40 hours a week at $12 an hour, before taxes, they will earn:
- $480 a week
- About $2,078 a month
- About $24,960 a year
In a city like Tampa, the median rent is currently $2,162. This rate is simply unattainable for those working minimum wage jobs and jobs on the lower pay scale.
According to Bay News 9:
- “In the Sun Coast region, the median wage for families is about $60,000. United Way has indicated for a family of four to live comfortably, you need about $80,000, and that doesn’t even take into account child-care and transportation barriers.”
- According to the Bureau of Labor and Statistics, the Tampa Bay Region saw inflation of 7.3% in the past 12 months.
- CEO of CareerSource Pinellas, Steve Meyer, says despite the pay bump, some families are being priced out of living in the region.
New Apartment Construction
The mass construction of new apartment buildings throughout the state also contributes to the decline in rental rates amongst single-family homes in Florida.
The construction of apartment complexes offering luxurious amenities and central locations has begun to take precedence over the demand for single-family homes. Often, these brand-new state-of-the-art complexes will attract residents with an appealing discount. A move-in discount of 50% off the first month of rent or a waived security deposit is often enough to convince someone to sign a lease.
In addition, these apartments provide living space for hundreds of people at a time. When a large complex can accommodate many people, the demand for single-family homes will decrease significantly. As a result of the decrease in demand, the rental rate also decreases.
How Can My Investment Property Be Successful?
Do these factors mean that there is no demand for single-family homes? The honest answer is no; there will ALWAYS be a high demand for single-family homes. However, at this moment, apartment complexes are affecting the rental rate.
The real estate and rental market are constantly evolving. Even though rental rates are adjusting, your investment property still has its value and ability to succeed.
If you’re a current rental property owner or landlord with a property that’s not renting, the first thing you should evaluate is the price you have it listed for. We have seen many rental owners & investors reluctant to lower the price of their rental because they were able to rent it for a much higher price a year ago. As experienced property managers, we understand that watching the national & state-wide rent rates drop is difficult and can be disappointing.
However, your property will remain occupied and successful if you price it right. If you overprice your property, tenants will seek other similar rentals with a lower rate. The current Florida rents will not be the permanent Florida rents. We encourage owners to price their properties appropriately and stay positive throughout this time.
Your real estate asset is secure and is still the safest investment you can make. Florida will continue to be an excellent state to own a rental property.
Florida Rental Market Conclusion
In conclusion, rent going down in Florida is not unusual or alarming. The rental property market is constantly growing and changing. As we have seen a global pandemic, significant population growth in Florida since 2020, and major construction projects, it is more than usual for the rental market to fluctuate.
As professional Tampa property managers with over 15 years of experience, the current rent decrease is nothing we haven’t seen before. Properties priced according to the current rental market will continue to thrive.
If you are a rental property owner or landlord, this is one of the most critical times to stay informed on the market trends. Hiring a professional property management company in a changing market can significantly benefit your investment and overall success. If you would like a FREE rental property price analysis for your property. Contact us at The Listing Real Estate Management, your boutique property managers, to connect with our local expert property managers today! We’d love to be a resource for you and your rental property.
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