It is no secret that the virtual workspace has had a significant impact on the real estate market. In fact, there is no better example of this than the Florida housing market. As a result, the demand for rental housing in The Sunshine State has risen dramatically, and so have the prices. For more on this, click here. With this said, could rental prices be slowing down moving forward? After all, we have already seen prices stabilize and even slightly decrease in the home purchase market.
A return to the workplace
Recently, real estate economists at Florida Atlantic University, The University of Alabama, & Florida Gulf Coast University conducted some research to determine where Florida rental prices are heading. What they determined is that rental prices will continue to increase, but at a more gradual pace. For example, rents in South Florida went up 28% in June 2022, as compared to the year prior. Moving forward, these rental prices are projected to increase by 18% next year. As for other markets throughout the state, they are projected as follows:
- Fort Myers, FL: 29% increase in June 2022; 14% increase in June 2023
- Tampa, FL: 22% increase in June 2022; 12% increase in June 2023
- Orlando, FL: 22% increase in June 2022; 16% increase in June 2023
Why are Florida rental prices expected to grow at a slower pace? The biggest reason is due to more companies adopting a hybrid work environment. In other words, many companies are now requiring their employees to physically be in the office at least several days out of the week while working remotely from home on the other days. Needless to say, this makes working for a company located in another state difficult if you are located in Florida. As a result, more of these workers are returning to their home states. In addition, Florida has also been the most popular relocation state for “pandemic refugees”. As pandemic restrictions continue to loosen up throughout the country, many of these Americans are heading back to their home states. To read the full report of this analysis, click here.
In closing, renters throughout South Florida should not expect rents to plummet over the next year. Instead, it is quite likely that they will not rise as quickly as they have over the past several years. For perspective, it is important to remember that in a normal market, rents increase about 3% to 5% annually. Therefore, we are still expecting to see rental prices increase above normal levels for the next year. While the pandemic push of Americans moving to South Florida may be slowing down, we still expect to see increased demand. Real estate investors should take note of this as this will likely continue to present investment opportunities.
Are you thinking about investing in South Florida real estate? We can help. Contact Natasha at Live South Florida Realty, Inc. Do you want an inside track on the market right on your mobile device? Download the Florida Home Search App today!