Did you know? Approximately 808 people move to the State of Florida each day! As a result, The Sunshine State has the fastest-growing population within the United States for the first time since 1957. Needless to say, over the past few years, Florida has become the most popular state to live, work, and play. As more Americans opt to bring their talents and dollars to Florida, we have certainly seen a thriving economy. Of course, this substantial growth has also put considerable strain on the housing market. For example, as of November 2022, the median price of a single-family home was nearly 10% higher than the year before. This has led to more would-be homebuyers opting to rent in Florida instead.
Increased rental demand = increased prices
Skyrocketing home prices and mortgage interest rates have led to increased demand for rental housing. Not surprisingly, this has led to rental price increases as well. At the national level, we have seen rental prices increase dramatically since the pandemic. As for Florida, we saw a 36% increase in rental prices from the first month of 2020 to the last month of 2022. Similar to home prices in general, we saw the greatest increases in rental prices throughout 2021. In the beginning of 2021, the median rental price was $1,266. By the year’s end, renters were paying $1,635. This equated to a 29% increase.
Rising rental costs are a risk to Florida’s overall economy. While, the state’s highest earners can likely commit more income to housing, those in lower earning brackets oftentimes need to make budgetary cuts in other areas or even leave the state entirely. Losing Florida residents to other states due to cost of living concerns is a real threat to our state. Although other states have also seen rental price increases recently, states such as nearby Georgia or even Texas could likely draw Floridians. For example, Georgia’s median rent of $1,390/month is approximately $300 less per month than Florida’s $1,698/month. As for Texas, residents can expect a median rent that is about $400 less per month at $1,298/month.
In closing, rent is typically considered to be affordable when it costs 30% or less of a household’s income. If rent exceeds this percentage, then the household is considered to be cost burdened. If rent exceeds 50% of a household’s income, then it is considered to be severely cost burdened. With this said, the average median income (AMI) for Florida households is about $61,777.13. The availability of affordable rental housing throughout the state continues to be a challenge. In addition to the existing workforce in need of housing, we also continue to see an increase in remote workers relocating to The Sunshine State. Addressing the housing needs of the state will greatly impact the overall health of Florida’s economy moving forward.
Are you looking to buy an investment property in South Florida? There continues to be a strong demand for rental housing in our area. Contact Natasha at Live South Florida Realty, Inc. to start or expand your real estate investment portfolio. While you’re at it, be sure to download the free Florida Home Search app for your mobile device as well.