Has South Florida's Residential Rental Market Peaked?
Has South Florida's Residential Rental Market Peaked?
A review of the South Florida rental statistics shows residential leasing activity flatlined on a year-over-year basis during the 2024 Summer Buying Season.
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Has the South Florida residential rental market peaked?
The number of leases completed in South Florida flatlined during the recently concluded 2024 Summer Buying Season, according to an analysis of statistics compiled by CondoVulturesRealty.com.
Tenants leased only about 32 more residential properties in the tricounty South Florida region of Miami-Dade, Broward and Palm Beach during the 2024 season compared to a year earlier in the 2023 season.
The Summer Buying Season traditionally extends from May through October when visitors and locals, alike, flee South Florida to avoid the humidity, hurricane warnings and limited number of events.
Tenants leased about 33,017 residences - apartments, condos, efficiencies multifamily units and townhouses - in the tricounty region in the 2024 season.
By comparison, renters leased about 32,985 residences in the 2023 season.
This represents about a 0.1 percent increase in total lease transactions on a year-over-year basis between the summers of 2024 and 2023.
A year earlier in the 2022 season, tenants leased about 27,252 residential properties in South Florida.
The “Have We Peaked?” question is worth asking as the median rental rate for residence dropped by nearly 12 percent - or $300 - to $2,300 monthly in the 2024 season, according to the statistics.
By comparison, the median rental rate for a residence was $2,600 in the summers of 2023 and 2022, respectively.
While this newly reduced monthly rental amount seems doable - and maybe even a deal - in popular areas including Greater Downtown Miami, Downtown Fort Lauderdale and South Beach, it is much harder to see tenants paying that much to live in low-rise projects with minimal amenities and dated interiors in the western suburbs of South Florida.
Prior to the pandemic, the median lease price for South Florida rental properties was about $1,650 monthly in the 2019 Summer Buying Season, according to the statistics.
As Florida has become increasingly expensive, the Wall Street Journal reported on Oct. 7, 2024, that “The Great Florida Migration Is Coming Undone" as people are now leaving the state, due in part, to “hurricanes and extreme weather.”
These departures are leading to “a surplus of housing inventory and dwindling buyer interest,” according to the article.
This is an about-face from the pandemic years when a plethora of work-from-home employees relocated to South Florida from places such as California, Illinois and New York.
For context, South Florida condo resales dropped by 22 percent during this year’s Summer Buying Season to a level of transaction activity not seen since 2009 during the Great Recession, according to a new report.
Industry watchers are at odds as to the direction of the South Florida housing market in 2025.
Bullish investors are predicting housing demand will reignite now that the Federal Reserve has begun to cut interest rates.
Bearish investors contend that home prices are too high and likely to collapse in the months ahead.
Added to this, unit owners are increasingly experiencing the headwinds - spiking special assessments and falling prices from sellers trying to unload their properties - from the looming 2025 Florida Condo Association Financial Cliff.