A good sign for renters? Competition may not be as fierce as before in South Florida

While home prices continue to soar, the rental market may be cooling down in South Florida, providing renters much-needed relief.

The Miami-metropolitan area, which includes Miami-Dade, Broward and Palm Beach counties, saw the most significant decrease in the median cost of rent from the first part of 2023 to the first part of 2024, out of the 75 most populated metropolitan areas across the United States, according to a report by Forbes Advisor.

The region saw a decrease of $400 in the median rental price for Quarter One, which is typically January, February and March, compared to the same time frame last year.

The report also found the tri-county area to be among some of the least competitive rental markets in the nation of the 75 metros, a finding that differs from when the region received high rental competitiveness scores at the end of last year. At the time, real estate experts predicted renter relief in 2024 with inventory picking up, price stabilization and even how 2024 being an election year may lead to lower interest rates.

In its report, Forbes determined these findings through metrics including availability of units, price and population.

“With all these methods, we’re looking at how difficult it might be to find a rental that’s available,” said Alexandria Cremer, a senior digital public relations strategist at Forbes Advisor.

Typically, lower rental competitiveness indicates finding a rental would be easier than if the rental competitiveness of a region is quite high.

Todd Cohen, a principal with Lee & Associates South Florida, which handles real estate deals across the region, defined rental competitiveness as “the ability to drive rental growth.” This growth is influenced by factors such as inflation or demand for housing being higher than the supply to address it.

“The demand is still there and Florida still is a place people are seeking out to move, and it’s not just a retirement haven anymore,” he said.

Growth still abounds

Cremer said the report found the Miami-metro area to be the 11th least competitive rental market because of various factors: a median rental price decrease, as well as a lower-than-average prospective renters’ population and a slightly higher-than-average vacancy rate, which is the number of days an available unit remains on the market.

Cohen said he has not necessarily seen a dip in rental competitiveness because growth still abounds, and supply is working hard to keep up with that demand.

“A tremendous amount was developed when, during the pandemic heyday, interest rates were still super low,” he said.

Cohen’s beliefs coincide with a RentCafe report from March, which found the Miami area to be the most competitive rental market in the U.S. at the start of the year.

The factors drawing people, developers and companies to the area during and right after the COVID-19 pandemic still persist, Cohen said, but the market “has to take a breather.”

“I’m just seeing that things have gotten back to what they were prior to this just exponential skyrocketing of growth and rental growth,” he said. “Developers who didn’t have to give any concessions to lease up their properties are now giving maybe a month or two of free rent to get people in because people aren’t moving here every five seconds like they were.”

These concessions does not mean the market is unhealthy, though, Cohen said. The influx of development and new supply means “the market needs to digest.” This also may lead to more opportunities to choose from when looking for a new place to live.

“That’s how things work and that’s how you get people to notice your building, and you need to be competitive because you’re not the only show in town anymore,” he said.

Another trend working against supply catching up to demand is the use of short-term rental units, often used by vacationers.

A deep need for workforce and affordable housing still exists, he said, which has brought forth programs such as the Live Local Act, which offers incentives to developers to allocate portions of residential projects to workforce housing.

“We can expect that there are apartments coming online every month, new deliveries are made by developers,” he said. “There will be a push to have more affordable and workforce, and I think there already are some that have been green-lit and have already been started to be developed and I think more and more of those will come online, so that will help.”