In yesterday’s article titled Is the Housing Market Overvalued? we discussed where home prices may be more at risk of a slight price correction. In this article, we will discuss the findings from a recent analysis of rental prices conducted by the Florida Atlantic University Real Estate Initiative and Florida Gulf Coast University’s Lucas Institute of Real Estate Development and Finance.
As we have seen with home prices during the past few years, rental rates have also increased dramatically. This analysis looked to rank the 25 most overvalued rental markets from among the nation’s largest metropolitan areas. The study utilized the Zillow Observed Rent Index (ZORI) to model rental trends. Based on the history of rental prices, this model indicates where rental prices should be relative to where they actually are.
Top 10 most overvalued rental markets
Florida cities represented 10 of the top 25 most overvalued rental markets across the country’s largest metropolitan areas. The full results of this study can be found here. Below are the top 10 most overvalued rental markets of which Florida cities represented all top 5 slots and 6 out of the top 10 cities.
| RANK | CITY | AVG. RENTAL PRICE | EXPECTED RENTAL PRICE | PREMIUM |
| 1 | Miami-Ft. Lauderdale, FL | $2,832 | $2,325.99 | 21.75% |
| 2 | Fort Myers, FL | $2,052 | $1,736.68 | 18.16% |
| 3 | Tampa, FL | $2,029 | $1,732.99 | 17.08% |
| 4 | North Port-Sarasota-Bradenton, FL | $2,402 | $2,053.40 | 16.98% |
| 5 | Port St. Lucie, FL | $2,201 | $1,903.88 | 15.61% |
| 6 | Kileen, TX | $1,322 | $1,145.00 | 15.46% |
| 7 | Bakersfield, CA | $1,688 | $1,473.93 | 14.52% |
| 8 | Lakeland, FL | $1,808 | $1,579.56 | 14.46% |
| 9 | Phoenix, AZ | $1,921 | $1,678.87 | 14.42% |
| 10 | Knoxville, TN | $1,526 | $1,334.69 | 14.33% |
Summary
Although Florida cities represented 6 of the top 10 most overvalued metropolitan rental markets, it is important to consider the migration pattern that we have seen in The Sunshine State over the past several years. With more Americans being able to work remotely from any location, we have seen many transplants relocate to paradise while still working for their employers in that are located in more expensive markets. Needless to say, this trend has driven up demand and thus prices dramatically. Moving forward, we expect the remote working environment to be completely adopted by many organizations thus removing all boundaries for where Americans must live. This will ultimately continue to bode well for the Florida housing market.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
