Rent prices in South Florida increase but the hikes are normalizing after pandemic frenzy

Rent increases have stabilized since their pandemic peaks but South Florida remains in an “affordability crisis” with the average tenant needing to earn nearly $112,000 a year to avoid being house-poor, according to a new Florida Atlantic University study.

The study, done in conjunction with researchers at Florida Gulf Coast University and the University of Alabama, looked at August prices in the nation’s 100 largest metro areas, including Miami, which includes Palm Beach, Broward and Miami-Dade counties.

The tri-county area ranked ninth for the highest annual income needed to avoid spending more than 30% of a household’s earnings on rent. Spending more than 30% is a benchmark for when housing becomes unaffordable.

Outranking Miami for unaffordability is first-place New York, which requires an annual salary of $136,479 to avoid being house-poor. New York was followed by five California metro areas, including San Jose ($135,422), San Diego ($128,275), San Francisco ($126,936), Oxnard ($123,382), and Los Angeles ($120,010).

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August’s average rent increase in South Florida was 2.83% compared with the same time in 2022. That’s far below the double-digit hikes renters were experiencing in 2021 and 2022, but it’s still a problem, said housing economist Bennie Waller, the William Cary Hulsey Faculty Fellow at the University of Alabama.

“It’s going to be a place only for the wealthy, and that’s going to be a huge concern because the workers that are needed to support the wealthy will have nowhere to live,” said Waller about South Florida. “They will have to drive, because how can they afford this?”

In its 2022 American Community Survey released last month, the U.S. Census Bureau estimated the median household income in Palm Beach County was $76,592. That’s $2,266 higher than the previous year, but far from the $111,914 needed in South Florida to avoid being house-poor.

Statewide, the median annual household income was estimated at $69,303. That’s $616 higher than the previous year, according to the survey.

“From the perspective of tenants, it is a challenging market,” said Realtor Donna Alexander, who works with renters and homebuyers in the Palm Beach Reserve office of Keller Williams. “Prices remain strong, but landlord requirements for tenant qualifications are also some of the most rigid I’ve ever seen.”

Alexander said some landlords are asking for the traditional up-front down payments, but also want proof that a prospective tenant is earning three times higher than the rental cost. So, if the rent is $2,000 a month, the tenant would have to earn at least $6,000. Credit score requirements of 650 to 675 are also more common.

“It’s really daunting,” Alexander said.

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The FAU study uses leasing data from Zillow's Observed Rental Index and includes all rental types, including homes and apartments.

Rent growth nationally averaged 3.25% in August compared with the previous year. Ken H. Johnson, a housing economist at Florida Atlantic University, said normal rent growth has traditionally been between 3% to 5% per year.

Orlando, Jacksonville and Lakeland saw the lowest rent increases

In Florida, Orlando saw the smallest rent increase in August compared with the previous year at 1.10%. The average rent in Orlando was $2,087 in August. Jacksonville’s rent hike was second lowest at a 1.31%, increasing the rent to $1,807. Lakeland had a 2.08% increase, with the average rent in August hitting $1,922.

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Waller said he’s not optimistic that affordability will improve soon in South Florida. While people may leave the state to escape the high price of housing, it's not enough to balance out the influx of people coming in, he said.

A July 11 population report from the state's Demographic Estimating Conference said Florida's growth was "slightly stronger than expected" between April 1, 2022, and April 1 of this year because of a higher net migration of people coming into the state.

Deaths in Florida continue to outpace births, but an average increase of 298,191 net new residents is expected each year through mid-2028. That's 817 people per day.

"Florida has a vibrant, expanding economic base that will continue to draw people in, most likely preventing rents from falling," Waller said. And while more homes, apartments and condominiums are being built, they are in higher price ranges, he said.

Alexander agrees.

“Yes, there is a building boom. Housing is available, but it’s not affordable,” she said. “We keep hearing there is a correction coming. Maybe in Louisiana or Indiana, but not in Florida. Florida is a different animal.”

Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida. She covers real estate and how growth affects South Florida's environment. Subscribe to The Dirt for a weekly real estate roundup. If you have news tips, please send them to kmiller@pbpost.com. Help support our local journalism, subscribe today.

This article originally appeared on Palm Beach Post: Rent costs in South Florida for apartments, homes rise but not as fast