Florida rentals are cooling off, partly because at-home workers are back in the office
After dominating the nationwide markets for rental price growth over the pandemic, cities in Florida are showing signs of a slowdown.
Eight of the nine measured cities in Florida saw yearly rent increases at or below the national average in June, according to researchers at Florida Atlantic University and two other schools.
Nationally, rents increased 4% percent year-over-year in June, while yearly rents in metros across Florida saw increases at or below that. Rents in Palm Bay rose 4%; Deltona, 3.9%; North Port, 3.7%; Miami, 3.4% percent; Tampa, 3%; Lakeland, 2.5%; Jacksonville, 2.4%; Orlando, 2.3%, according to the Waller, Weeks and Johnson Rental Index.
Cape Coral was the only metro in Florida with yearly increases higher than the national average: 7.7%.
While the ability to work from home over the pandemic resulted in an influx of people moving into Florida, the return-to-office mandates that many companies have begun instituting are playing a role in the slowdown, says Ken H. Johnson, a housing economist at FAU's College of Business, who along with along with fellow researchers Shelton Weeks of Florida Gulf Coast University, and Bernie Waller of the University of Alabama conducted the study.
“When the pandemic first hit, you could go live in Florida and work from home five days a week. But as soon as the businesses in New York City said, ‘well, you're gonna have to come in some number of days a week, well, you can't live in Miami and work one day a week and commute back to New York City, the other four’,” Johnson told USA TODAY.
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The rental price increases in Cape Coral, the only city in Florida to fare better than the national average, is attributable to scarcity of housing inventory in the aftermath of last year's Hurricane Ian, which damaged homes and propped up rental prices on available stock, according to Johnson.
But that doesn’t mean rents have become affordable in the Sunshine State.
“They just aren’t expanding as rapidly as before,” said Johnson. “The state is easing out of a rental crisis and into an affordability crisis where renters are faced with increasing costs and incomes that aren’t rising to meet those costs.”
A few factors are keeping rents elevated in Florida, with little signs of a decline: a sustained influx of out-of-state people still moving to the state, hybrid office work options that allow people to work from home and an insufficient number of units coming on the market to meet demand.
“It’s taking longer than it needs to build in Florida, and we are still exposed to the scenario where apartment rates could take off again if we don’t start building fast enough,” Weeks said. “It’s also possible that some people will leave the area, as the cost of living is getting too high.”
The highest yearly rental increases in the country were found in Madison, Wisconsin, where rents increased 10%; Charleston, South Carolina, 8%; Springfield, Massachusetts, 7.6% percent; Wichita, Kansas, 7.3%; and Knoxville, Tennessee, 7%.
“In the areas of the country where year-over-year rent increases are the highest, supply continues to significantly lag demand,” says Waller. “It takes time to put turnkey units into the ground. In time, rents will come into line as supply and demand come into balance. However, the affordability issue will still be there.”
All three researchers agree that the rental crisis is morphing into a protracted housing affordability crisis, which more units on the markets and corresponding increases in wages can best solve.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.