Florida rent prices could cool as ‘COVID refugees’ return home
Renters looking for some relief from skyrocketing monthly rent payments may get it from an unlikely source – “COVID refugees” returning home, according to a report from two Florida universities and the University of Alabama.
During the COVID-19 pandemic, rents in the North Port-Sarasota-Bradenton metropolitan area shot up faster than nearly anywhere in the country.
Many real estate experts pointed to the rise of remote work and the allure of warm sandy beaches as reasons for the spike in rents across the Sunshine State.
After all, why stay in a mostly shut-down New York City when you could file office work from Siesta Key?
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The latest report from Florida Atlantic University, Florida Gulf Coast University and the University of Alabama looking at average rents across more than 100 metro areas noted that the days of skyrocketing rents in Sarasota could be numbered, as many companies have begun to implement more in office requirements for employees.
The July report from the universities also said rent growth in Florida markets “are on pace to slow dramatically in the next year. At the same time, rents in New York metro area are poised to rise about 21% by June 2023.”
“Those COVID refugees placed a significant burden on the demand for rental units in Florida, and rents spiked to historic highs while New York became slightly more affordable,” said Ken H. Johnson, an economist with FAU. “With those workers returning home, Florida should see a cooling in its rent hikes, and New York renters will again have to deal with much higher rates.”
According to the data released Monday by the three colleges, the average rent in the Sarasota metro area was $2,393 – about 24.2% higher than a year ago, which is the third largest year-over-year increase in the country.
Florida metro areas are some of the most overvalued in the country, according to the report’s rent model, with eight of the top 10 Florida metro areas accounting for the fastest year-over-year rent growth.
The Fort Myers metro area led the nation with 29.2% rent growth followed by Miami-Fort Lauderdale with 28.4% year-over-year rent growth. Orlando with 22.4% rent growth and Tampa with 22.2% rent growth rounded out the top five areas with the largest year-over-year increases.
“The Fort Myers and Miami metropolitan areas once again rank as the nation’s two most overvalued rental markets, with renters this June paying about 29% more than they did in June 2021, figures from the Waller Weeks and Johnson Rental Index show,” according to a news release about the release of the data. “In fact, the top eight of 109 overvalued markets all are in Florida and had year-over-year rent jumps exceeding 21%.”
The researchers use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. The analysis covers the entire rental stock of homes and apartments, according to a news release about the data.
The data on average rents and the year-over-year rent increases is quantifiable, but there is not clear data on whether “COVID refugee” are leaving Florida because of in-office work requirements.
However, Michael Harari, an association professor of Human Resource Management at FAU, said trends show that many companies are moving toward a hybrid model where employees come in for a couple days a week and work from home other days.
Some executives, Harari said, have expressed concerns about their company’s culture if remote work replaced in-office interactions permanently. However, some employees have pushed back against returning to the 9-to-5 daily grind.
This has led some companies to pick a middle ground.
“There’s certainly a continued trend toward hybrid options,” Harari said.
That means anyone who had moved because their company’s office closed during the pandemic may need to move back to where their office was located as office policies are updated.
Then, possibly, the estimated decreases to Florida’s rental market may occur, although, at this time, rents are still near record highs.
