By Gay Cororaton, MIAMI REALTORS Chief Economist
Asking rents in Southeast Florida are likely to rise at a modest single-digit pace hovering at 5% as the decline from the pandemic-induced surge stabilizes and as deliveries in 2024 add to the current vacancy rate of 10%. Based on the housing permits issued, building permits authorized in 2021 rose by about 5,000 units compared to the levels in 2019 and 2020.
Lower mortgage payments will also release some of the rental demand into the for-sale market. As mortgage rates decline in 2024 which could hit 5.75% by end of 2024, mortgage payments will fall, by about $300/month on a $400,000 condo unit, improving affordability for 36,000 renter households earning above $100,000.
Broward and St. Lucie, given their lower asking rents, will likely see more demand from households seeking more affordable units while Miami-Dade, Palm Beach, and Martin County will generally tend to attract higher income households and retirees.
Single-family Asking Rents are Holding up Better than Multifamily Rents
Single-family asking rents continued to increase in November 2023 in Southeast Florida, based on combined rental listings on the Miami Association of REALTORS® Multiple Listing Service and the Rental Beast listing platform.
Single-family asking rents are up year-over-year in Broward, $3,500 (8%); Palm Beach, $4,100 (14%); Martin, $3,300 (18%); and St. Lucie,$2,650 (4%). In Miami-Dade, the median single-family asking rent in November was $3,500, unchanged from one year ago.
Single-family rentals have increasingly accounted for a higher share of rental listings, with the share doubling from 21% in 2021 to 39.4% as of November 2023. This trend is an indication of the pent-up demand for home ownership due to higher mortgage rates and a preference for single-family homes that could be associated with hybrid/remote work (space needed to work at home).
On the other hand, multifamily asking rents have been declining since the second quarter of 2023 , as supply has outpaced absorption, as indicated by the uptick in the apartment vacancy rate in 2023 Q3 to 10.1% from 6% in the prior quarter, according to the US Census Bureau.
The 2-bedroom multifamily asking rents were down year-over-year in Miami-Dade to $3,900 (-1%), Broward, $2,295 (-12%); Martin, $2,000 (-3%). However, asking rents were up in Palm Beach, at $2,600 (+4%) and in St. Lucie, at $2,500 (+19%).
