The current strains on the economy due to the pandemic, combined with increasing home prices has resulted in higher prices and inventory constraints for rental homes. In particular, the single-family home rental market has become extremely competitive in South Florida. With this said, this is not the case across all markets. As a matter of fact, rents are actually falling across many major cities in the U.S. Cities such as New York & San Francisco as a result of the COVID-19 pandemic.
With many big city residents now working remotely, this has led to many of them purchasing homes in the suburbs. Thus, this is resulting in significantly less demand for rental housing in big cities. Compared to this time last year, rents in big cities are down an average of 4%. Another challenge being felt by big cities is the overall job market. For example, oftentimes recent college graduates end up moving to the big cities to begin their employment. Unfortunately, many larger companies have either paused any hiring or even initiated layoffs due to the pandemic. This has resulted in many college graduates moving back in with their parents during these difficult times.
Concessions from landlords
In these large cities, landlords are having to offer incentives in order to attract prospective tenants. Rather than simply reducing rental amounts substantially, many landlords are offering concessions such as a free first month’s rent, free parking, or even a deposit waiver. Many landlords prefer to offer these concessions as opposed to reducing the rental amount because it is always more challenging to bring up the rental amount as the market shifts back to normal. Another segment of the market where we are also seeing concessions being offered by landlords is in college towns. With many universities offering classes virtually, this has also reduced the demand for rental housing across many college towns.
What about South Florida?
Overall, the rental market in South Florida is actually remaining strong and even strengthening in many markets. As expected, the single-family rental home market in suburban areas is the leading sector of the overall rental market. As an example, our real estate brokerage is often taking inquiries from other real estate agents on properties that we have under contract already. Due to the lack of inventory, this is forcing many agents to proactively contact well established real estate brokerages to potentially learn of properties coming to market soon.
If you are a tenant looking for a rental home right now, it is strongly advised to work closely with your real estate agent to be notified of properties as soon as they hit the market. If it is a single-family home, you will want to act swiftly in order to potentially have your offer accepted. Overall, the rental housing market in South Florida is extremely competitive right now. Further strengthening is expected for the remainder of this year and beyond as well.