We’ve learned that rising rental prices will eventually stabilize, but for now, the market is still at the mercy of those willing to pay top dollar.
Florida was the final destination for Szimenda Cyclodi. She grew up in Romania, but took root in South Florida years ago while working as a flight attendant.
For the past four years, it has been called the home of an apartment complex in Palm Beach County.
“I live alone and it is very important that I live in a safe area,” she said.
She said she is a quiet, on-time renter for her two-bedroom, two-bathroom unit in a gated community.
When her lease expired in March, she was stunned to learn that her $2,300 rent had gone from $1,075 to $3,475.
“I cried for two days,” she said.
She decided to pay hundreds more in additional monthly fees while looking for a new place to live, but it was hard to find anything to beat her current living situation.
“I’m thinking about leaving or staying or I don’t know,” she said.
This topic is very timely in the classroom, said Dean Dr. Brian Straw at the Rinker School of Business at Palm Beach Atlantic University.
“There are 335 million people who buy and sell goods and services on any given day, so there are a lot of iterations to make it complicated,” he said.
There is currently a low supply of rental homes and a high demand. They are all symptoms of our own success. People who are able to pay rent are moving to South Florida.
People say, “The rents are too high, and no one can afford them.” But the opposite is actually true. Many people can, and are willing to, afford these rents.” “The demand is very high to live here, and that is why rental prices are going up. We saw in 2021, 12,000 net jobs added to Palm Beach County, so the number of workers increased by 12,000 over the previous year.”
Real estate information company CoStar has sent job vacancy rates via WPTV for Palm Beach County and the Treasure Coast.
The number of job vacancies in all regions is lower than in the first quarter of 2019.
Vacancy Rate – Source CoStar
- Palm Beach – Florida: First Quarter 2019 – 6.4%; 2019 Q2 — 6.9% Third Quarter 2019 – 6.7%; Fourth Quarter 2019 – 6.7%; First Quarter 2020 – 7.9%; 2020 Q2 — 8.2%; Third Quarter 2020 – 7.4%; Fourth Quarter 2020 – 7.7%; 2021 first quarter – 6.2%; 2021 Q2 — 4.8% 2021 third quarter – 3.5% 2021 fourth quarter – 4.2%; 2022 first quarter – 4.5%
- Port St Lucy – Florida: First Quarter 2019 – 5.7% 2019 Q2 — 6.1% Third Quarter 2019 – 6.1% Fourth Quarter 2019 – 4.6% First Quarter 2020 – 3.7%; 2020 Q2 — 5.3% Third Quarter 2020 – 6.8%; Fourth Quarter 2020 – 4.5% 2021 first quarter – 2.5% 2021 Q2 — 3.9%; 2021 third quarter – 3.8%; 2021 fourth quarter – 3.6% 2022 first quarter – 3.4%
- Sebastian Ferro Beach – Florida: First Quarter 2019 – 1.6% 2019 Q2 — 1.5% Third Quarter 2019 – 1.5% Fourth Quarter 2019 – 1.8% First Quarter 2020 – 3.2%; 2020 Q2 — 3.2%; Third Quarter 2020 – 2.5% Fourth Quarter 2020 – 1.9% 2021 first quarter – 1.5% 2021 Q2 — 1.0% 2021 third quarter – 0.8%; 2021 fourth quarter – 0.6%; 2022 first quarter – 1.1%
- National: First Quarter 2019 – 6.3%; 2019 Q2 — 6.1% Third Quarter 2019 – 6.2%; Fourth Quarter 2019 – 6.5% First Quarter 2020 – 6.7%; 2020 Q2 — 6.7%; Third Quarter 2020 – 6.7%; Fourth Quarter 2020 – 6.6%; 2021 first quarter – 6.1% 2021 Q2 — 5.1%; 2021 third quarter – 4.7% 2021 fourth quarter – 4.8% 2022 first quarter – 4.9%
Strow points out that owners are facing price increases.
“With rising property prices, whether it’s a home or an apartment complex, the only way an apartment complex owner can offset the costs of rising property prices is to pass on that cost to tenants in terms of rent,” Straw said.
Landlords who haven’t been able to evict their tenants during the pandemic have bigger bills.
“Before we pick landlords to make a lot of money now, remember that they’ve taken a bigger hit, more than other sectors of the economy during the recession,” Straw said.
WPTV has heard from several local tenants who said that, being slapped with much higher rents, they have witnessed neighbors move out en masse.
If an individual landlord exceeds the amount that new incoming tenants will be willing to pay, there may be a point where too many vacancies will force them to rethink a sharp increase, Straw said.
“Sure, they’ll skip others, so you’ll get individual examples of someone who’s coming up very large and has slightly higher vacancy rates, but they’ll readjust the rent, reset it, potentially lower the rent because it’s expensive for them,” Straw said. . “If they can get a really good tenant there to pay, they have no incentive to leave it vacant.”
The bad news for renters, he said, is that prices generally won’t go down. You can expect them to stay high or climb in the short term but eventually reach a plateau.
“At the current pace, it’s an unsustainable environment for rent increases, so we won’t see another 57% year-over-year increase in rents like we did last year,” Straw said. “However, I don’t really expect a downward correction. I don’t see rents going down, so the best we can hope for is to stabilize a bit.”
On the positive end, Straw said more housing options will be built in the longer term.
“If we see rent prices go up, that sends a big, bright flashing light to home builders and apartment builders, ‘Hey, we need you.’” We want you to start building a new apartment, a new apartment complex, a new house,” Straw said.
Straw said some of his students tried to negotiate with landlords, offering to do yard work and maintenance on the house in exchange for keeping rental rates lower. It worked in some cases but not in others.
In the meantime, Ciclodi continues to evaluate her options on staying in her current apartment.
“I’m happy to live here,” said Cyclodi. “this is my home.”
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