Fla. rental prices remain overvalued; other states see relief

BOCA RATON, Fla. — The inflated costs to rent an apartment or home might be cooling off somewhat in the U.S. — just not in Florida.

Rental costs in the Sunshine State remain among the nation’s most overvalued, according to researchers at Florida Atlantic University and two other schools.

The study released Friday said that Miami leads the U.S. with renters spending 18.22% more than they should, based on past leasing price history.

Five other Florida markets are among the top 10 in most overpriced rental premiums:

• Cape Coral-Fort Myers
• Tampa
• North Port-Bradenton
• Orlando
• Deltona-Daytona Beach

Nationally, the average rental premium at the end of September was 9.33%.

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When it comes to the largest annual increases, Miami again topped the list at 18.81%. In typical markets, rents increase only 3 to 5% a year.

Four other Florida markets rank in the top 10 for largest annual rent increases:

• Cape Coral-Fort Myers
• Deltona-Daytona Beach
• Orlando
• Palm Bay-Melbourne

Click here for the full rankings.

“It is clear from the data that rents across the U.S. are reverting back to a more normal long-term trend,” Ken Johnson, a real estate economist at Florida Atlantic University. “But I’m not surprised to see Florida still at the head of the pack, given the strong demand and severe shortage of units.”

Housing experts said that the long-term effects of Hurricane Ian on the southwest Florida rental market are unclear.

“But in the short term, it is reasonable to expect a continuation of our pre-Ian supply chain issues,” Shelton Weeks, a real estate expert at Florida Gulf Coast University, said. “It most likely will be harder than ever to acquire materials and labor at reasonable prices, which will definitely exacerbate rental issues in this area of the state.”

The researchers said they were encouraged by the national trends, despite Florida renters still suffering through these tough times.

“No one can say the rental crisis is over just yet, but it isn’t getting worse, at least in some areas,” Bennie Waller, a business expert at the University of Alabama said. “For example, the most recent average rent increase in Birmingham, Alabama was 8.36 percent, but four months ago the increase was 10.99 percent. So it’s moving in the right direction.”

The researchers said their study used leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014.