Most economists are not predicting the catastrophic housing crash of 2007-2009 when there was a surplus of homes nationwide and a market saturated with bad mortgages.
Renters are up against the same spike in prices as homebuyers, with Florida having five of the nation’s top 25 most overvalued rental markets, according to a study released this week by FAU, Florida Gulf Coast University and the University of Alabama.
Palm Beach, Broward and Miami-Dade counties came in first place for the most overvalued rents, with people paying nearly 22% more than what they should based on historic pricing trends. Fort Myers was runner-up, with rents overvalued by 18%. Tampa was third at 17%, followed by Sarasota (16.9%) and Port St. Lucie (15.6%).
The first market listed outside of Florida was Killeen, Texas. Also in the top 10 for most overvalued rents are Lakeland, Bakersfield, Calif., Phoenix and Knoxville, Tenn.
“There are a lot of people being forced to reduce the size of their housing because of the higher prices,” said United Realty Group Realtor Tonsela Watts. “If a couple has two children, instead of living in a three-bedroom home with two bathrooms they are down to a two-bedroom apartment and one bathroom.”
Watts said she helped a client rent an efficiency apartment in Riviera Beach recently for $1,240 a month. Tenants in the same complex with current leases were paying only $550. That’s a price sure to increase when their leases renew, Watts said.
“I feel bad for people, but it’s beyond my control,” Watts said.
Landlords note that their costs are going up also with non-homesteaded properties getting hit with tax hikes and higher insurance premiums. A Singer Island landlord who didn’t want her name used out of concern her renters would read about her talking about raising their monthly payments said she’s had to increase leasing costs just to keep making the same money she did a year ago.
She’s considering turning two of her properties into short-term rentals to make up for the loss in revenue – a move that would take more rental homes for full-time residents off the market.
“Higher rents will persist until inflation comes under control and we build enough units,” said Shelton Weeks, FGCU’s Lucas Professor of Real Estate. “In the meantime, people will have to make hard choices.”