South Florida is becoming the nation’s worst place to rent
Rents continue to rise outpacing wage growth, and South Florida could become the worst place in the country for renters by the end of the year.
Renters are likely to devote 40% of their income to rent by the end of the year. That would be a full percentage point above June.
Wages in South Florida have increased a little, but not as much as the national average growing by 2.9% in South Florida, as the consumer price index for housing in the area rose by 3.5%.
Service workers, have received only a few dollars in wage increases per hour, while rents rise steadily. Rents for apartments in Fort Lauderdale increased 17%, while West Palm Beach rents increased by 18%, while Miami saw a 19% increase in rents over the past year.
Landlords from Tampa, Florida, to Memphis, Tennessee, and Riverside, California, are jacking up rents, and some renters are forced to check into hotels while they hunt after losing out.
The rental is now seeing record demand, as the number of rental units jumped by half a million, the biggest annual increase going back to 1993. Rents on newly signed leases surged 17% in July, as the gains reflect competition for somewhere to live. Young Americans looking for their first apartment are competing with remote workers and their high paychecks.
“The entire housing market is on fire, across the board from homeownership to rental, from high-end to low-end, from coast to coast,” said Mark Zandi, chief economist for Moody’s Analytics. “It’s a basic need but it’s increasingly out of reach.”
Eviction bans also are playing a role in keeping the market tight, because about 6% of tenants are normally forced to vacate each year. The country’s shortage of affordable rentals is the worst since at least the post-World War II period.
The squeeze will have economic consequences because workers can’t easily move for jobs and will have less to spend on things other than housing.
The housing market is tough for first-time homebuyers who want to move beyond renting.
Builders, focus on more-expensive, more-profitable homes when demand is high so established homeowners can’t find a new place to buy.
New entry-level homes have fallen to its lowest level in five decades.
Palm Beach County, only has 54% of homes affordable for a family making the median income, Broward County is lower at 53%, and Miami-Dade fares are the worst in South Florida.
The cost to build a smaller home makes it difficult to pass on costs to an entry-level buyer.
Construction continues on townhomes in the Saddlewood community in Lake Worth Beach on Friday, Aug. 6, 2021.
Taxes will go up as South Florida’s property values keep rising.
Properties have increased an average of 5% in taxable value in Broward and Palm Beach counties, and they rose by more than 3% in Miami-Dade.
“Our residential real estate market is incredibly hot,” said Marty Kiar, Broward’s property appraiser. “People are coming from all over the country to South Florida and making this their new home. People are coming from states where you have an income tax who are now making Florida their home. That’s driving the values.”
Cities use these property value estimates to decide your property tax rate, a process that begins this summer. The rates determine how much money local governments collect in taxes. More Florida transplants are paying cash for properties, there are more bidding wars, and people are buying properties sight unseen, Kiar said. “We have a lot of people from New York, from the northeast states. Every day I talk to people in the office and I say, ‘Why are you moving here?’ And they say, ‘New York is so expensive. And now I can work remotely.’ It’s every day, the same conversation that comes up and it’s amazing to me.”
Despite the pending hikes, homesteaded property owners won’t have to worry too much: Their assessed property value is capped and cannot increase more than 1.4%.
Historical high prices continue to climb from month to month in Miami-Dade County, as sales price for a house rose to $491,250 up by 9%. Condo prices rose as well to $305,000.
Broward also hit a record with sales price for a house at $445,000, and Condo prices rose from $200,000.
“Miami is a multicultural, world-class city in a tax-friendly state, and home buyers in tax-burdened states have pent-up demand to live, work and play here,” said Jennifer Wollmann, Miami Chairperson of the Miami Realtors Association. “Low mortgage rates, the increased availability of remote work, relocating companies, Miami’s advancements as a global center for technology and finance, and increased interest from international buyers have all played a role in rising home sales.”
With inventory so tight, sellers are able to get what they ask, as houses are closing at
97.3% of the asking price. The number of condo sales leapt by 80% year-over-year.
The Palm Beach’s real estate market has escalated as if on-steroids.
Residential sales volume in town during January, February and March exceeded $1.2 billion!
“The Palm Beach market continues to be white-hot,” John Hackett, Corcoran’s regional senior managing director said.
The spark in sales affected single-family properties, townhouses and the long-sluggish condominium market.
“The substantial increase in activity across all housing types is a sign that people simply want a piece of South Florida to call their own. Interest in the region as a primary home destination continues to accelerate. Buyers are taking advantage of their ability to work from anywhere, and those lured here by the climate are staying because of the attractive cost of living and considerable tax advantages,” Hackett said.
Photos by Getty IMages