By Gay Cororaton, MIAMI REALTORS Chief Economist
Southeast Florida’s vacancy rates on buildings with 10 units or more continue to trend below the national rate. As of August 2024, the vacancy rates on multifamily buildings with 10 units or more were lower in Miami-Dade County (6.2%), Broward County (6.1%), and Palm Beach County (6.4%) than nationally (6.7%) according to ApartmentList.com estimates.
Due to lower vacancy rates, the typical asking rent in the Miami-Fort Lauderdale-West Palm Beach Metro Area rose at a faster pace of 2.8% than the national increase of 2.5%, according to the Zillow Observed Rent Index (ZORI). In contrast, the typical multifamily rent decreased in Sunbelt metro areas such as Austin (-4.8%), Dallas (-1.3%), San Antonio (-0.8%), Atlanta (-1.7%), Charlotte (-0.7%), and Phoenix (-0.2%) . However, rents rose at a faster pace in the New York metro area (+3.3%), Boston (+3.7%), and Washington DC (+4.4%)
Solid job growth is supporting a strong rental market in the Miami Metro area. As of July 2024, the Miami Metro area had the second highest nonfarm employment growth among the 30 largest metro areas in July 2024 (tied with Phoenix), eclipsing those of Sunbelt markets like Dallas (1.3%), Austin (1.4%), Atlanta (1.7%), and Charlotte (1.9%). The Miami Metro area’s job growth also outpaced major gateway markets like New York (2.0%), Los Angeles (1.7%) , Boston (1.1%), San Francisco (0.8%), Washington DC (0.8%), and Chicago (0.1%), according to the Bureau of Labor Statistics.
Gap between owning and renting a single-family home narrows by $100 to $300 as mortgage rates decline
With mortgage rates dropping to 6.6% as of August from 7% in March-April, the difference between the cost of owning versus renting a single-family home as of August 2024 has dropped compared to the peak levels in March-April by about $100 to $300 in Miami-Dade ($87), Broward ($267), and Palm Beach ($235).
As of the week of September 13, Freddie Mac’s 30-year fixed rate mortgage dropped to 6.2% with financial markets anticipating a series of rate cuts starting in September 2024. The Federal Reserve indicated a one percentage point cut in the federal funds rate in 2025 as of its June 2024 meeting.
5,000 Southeast Florida renter households could become homeowners as mortgage rates fall from 6.5% to 5.75%
The decline in mortgage rates with rate cuts on the horizon as inflation wanes could attract renters into the for-sale market. MIAMI Realtors® estimates that as the 30-year fixed mortgage rate declines from 6.5% to 5.75%, the income needed to afford the mortgage on a $500,000 home with a 10% downpayment decreases from $136,500 to $126,100, enabling 5,000 renter households to afford a mortgage (note: calculations are based on a 25% mortgage payment to household income share to enable a household to pay for other housing costs and not pay more than 30% of income on housing and that 20% of renter households have savings to pay for the downpayment based on the share of renter households at the national level who hold CDs or stocks).
Get more insights on our August 2024 Southeast Florida Residential Rental Market Report.
