Rent prices in South Florida to go up, but not dramatically

Rent prices may continue to rise for South Florida residents, according to a recent study released by researchers with Florida Atlantic University and Florida International University — but not by a drastic amount.

Metropolitan areas across the nation’s East Coast, including in the greater Miami region, are signaling a future rise in prices. The Miami region’s price-to-rent ratio, which is calculated by the number of dollars in property prices paid for each dollar in annual rent, stands at 13.47, according to the study.

A price-to-rent ratio below 15 suggests prices will likely increase, and residents are better off buying rather than renting. (That means the study suggests people are better off buying in South Florida if they can afford it.) If the ratio is 21 or more, residents are better suited to rent.

“Low means you should own,” said Ken Johnson, a real estate economist at FAU’s College of Business.

Home prices should not rise or fall dramatically in the near future, Johnson said.

“You should see less volatility in prices,” he said. “We just don’t think prices will move around that much. … I don’t think you’re going to buy a home and see prices crash dramatically, you know, six months from now.”

This falls in line with research from last month that concluded waiting to buy or even rent would not be smart because prices will likely not go down.

Johnson said he is confident that salaries will rise accordingly.

“I feel pretty comfortable in saying that the average salary will go up at a greater percentage than the average rent will,” he said.

The primary problem lies in a lack of adequate housing unit availability because even as population growth in South Florida slightly slows, the current supply struggles to meet the large demand.

“It’s very difficult at this point in time to build affordable houses,” Johnson said.

Patty Da Silva, a broker with Green Realty Properties in Cooper City, agrees that the core issue is a lack of units.

“We don’t have enough housing, period,” she said.

Also like the researchers, Da Silva said buying is, at this point, better than renting, if one can afford to do so. A marketplace of homeowners is far less vulnerable than a marketplace of renters, she said.

Another phenomenon happening across the entire region is a slowdown in population growth, which could harm price performance, or the ability of prices to remain relatively consistent.

The Miami-Dade, Broward and Palm Beach tri-county area is only projected to experience a 6.8% increase in its population over the next 10 years, whereas the population of Orlando may rise by 22.5%, according to the study.

“However, that is a problem for another day,” said William Hardin, FIU’s College of Business dean, in a statement. “Right now, we are still dealing with an inventory shortage that is helping to create a major housing affordability problem across Florida.”