Florida rent drops as people flee state

Rent in some of the biggest cities in Florida declined in April compared to a year ago, according to real estate platform Redfin, at a time when some residents are relocating away from the state.

Jacksonville saw median asking rent in the city drop by 5.6 percent. Meanwhile, Miami reported a decline of 5 percent, Tampa’s fell 4.3 percent and Orlando also saw its rent asks go down 3.2 percent according to Redfin’s data, in what were among the biggest drops of the month.

Read more: Find the Lowest Rates From Top Mortgage Lenders

The drop in rent comes at a time when the state is seeing some of its residents move out, even as it is still experiencing a net increase of people moving there. About 500,000 people left the state in 2022 while nearly 750,000 moved in, according to data from the Florida Chamber of Commerce. For 2024, they are forecasting between 225,000-275,000 new residents to move into the state.

The Context

Florida was among the Sunbelt States that saw its housing market experience a surge during the pandemic as Americans moved from other parts of the country in search of warm weather and lower taxes.

According to the state’s chamber of commerce, over the last decade, migration into the state grew an average of 3.7 percent a year while people leaving was stable at about 1.5 percent. The higher number of people moving into the state, particularly during the pandemic had led to more competition for prices of homes, which helped push up rent prices.

Read more: How to Get a Mortgage

But analysts say the COVID trends of migration have cooled. Additionally, residents of the state are also moving out due to high costs of homeowners insurance, which has hit crisis levels in the state amid escalated climate-change-related weather disruptions.

Views

A combination of cooling COVID-era population shifts and unique housing trends that emerged during the pandemic have led to a fall in rent in places like Florida.

“The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom,” Sheharyar Bokhari, Redfin’s senior economist, said in an analysis. “But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall.”

But within that trend can be gleaned a lesson for parts of the country struggling with affordability issues—build more.

“The good news is that the uptick in housing supply in the Sun Belt has improved affordability for renters, which can be a lesson for other American cities grappling with housing affordability challenges,” Bokhari said.

What’s Next

Redfin pointed out that while on a yearly basis, there was evidence of falling rents, the cost of leasing a home was still high. In Miami, for example, on a monthly basis, rent was still up more than 2 percent in April to about $2,500 per month even as Jacksonville and Tampa saw a drop while Orlando was basically unchanged.

Read more: How to Buy a House With Bad Credit

Also, with mortgage rates elevated at about 7 percent, most prospective homeowners are likely to opt to rent, which in turn creates more competition that leads to higher monthly costs of leasing a house.

“Some renters are putting off their home purchasing plans because monthly payments for homebuyers are near their all-time high,” Redfin pointed out, talking generally about national trends. “While asking rents aren’t rising at the meteoric pace they were during the pandemic, they remain elevated—causing affordability challenges for some renters.”