Did you know? On average, rental prices have increased almost 4% in South Florida in the past year. This equates to double the increase from the prior year. Moving forward, many economists are predicting that rents will rise 2.5% to 3.5% in the coming year. Not surprisingly, the increased amount of Americans relocating to South Florida is driving up the demand for rental housing. In addition, more would-be home buyers are also entering the rental market which is driving competition even higher.
Unsuccessful home buyers = more competition
A unique dynamic that has been taking place in the South Florida real estate market for the past 15 months is the increased amount of would-be home buyers entering the rental market. In particular, many of these buyers have been attempting to purchase a home with a mortgage. Unfortunately, they are not only competing against an increased number of other buyers in the area, but they are also competing against many out-of-town buyers. To make things even more difficult, a lot of the out-of-town buyers are cash buyers. Needless to say, it is particularly difficult for a home buyer with a financing contingency to compete with cash buyers.
Known as “transitional renters”, many of these newfound renters are opting to even pay higher rental amounts in order to go month-to-month until they are able to find a home to purchase. Even in lower-priced markets such as Lake Worth, FL, we have seen the average rents for complexes with more than 50 units increase by 5.4% over the past year to $1,553. In Boca Raton, FL, rents have increased by 7.6% to $2,177. Meanwhile in Fort Lauderdale, FL we have seen increases of 3.1% to $2,059.
First-time home buyers continue to see the most significant challenges as many of these would-be buyers typically need to finance a large portion of their purchase. Needless to say, competing in bidding wars with oftentimes cash buyers results in a low likelihood of success. To further exacerbate the situation, increased rental prices make it even more difficult to save for a down payment on a home purchase.
Although this is a challenging market for many home buyers, it is not impossible. It is critical that you have a team of knowledgeable real estate professionals guiding you throughout the process. At Live South Florida Realty, Inc. we have assisted many home buyers achieve their dreams of home ownership in this competitive market. Are you ready to form your plan for success? Contact Live South Florida Realty, Inc. today!