TAMPA, Fla. (WFLA) — The rent cost is high, and has been for a while, especially in Florida. As housing costs remain a significant driver of overall inflation, a new study by Florida Atlantic University dives into why rent costs are so high in the Sunshine State, especially compared to the rest of the United States.
FAU reported that Florida is home to nine of the 21 most overpriced rental markets in the nation, with Tampa, North Port, and Lakeland among cities where renters pay the highest premiums in the U.S.
The Waller, Weeks and Johnson Rental Index, is a production from theFlorida Atlantic University Real Estate Initiative, Florida Gulf Coast University’sLucas Institute for Real Estate Development & Finance, and theAlabama Center of Real Estateat the University of Alabama.
The index showed that rental costs are put on a premium month-over-month and year-over-year due to a number of factors, including short-term rentals and home owners’ association costs.
According to FAU, “Cape Coral-Fort Myers renters lead the nation in paying 18.05% above the long-term leasing trend. Miami; North Port; Tampa; Orlando; Deltona-Daytona Beach; Palm Bay-Melbourne; Jacksonville; and Lakeland also have some of the nation’s highest premiums.”
Compared to the Cape Coral’s 18.05%, the rest of the U.S. has an average rental premium of 7.4%.
Dr. Ken Johnson, an FAU economist, said part of the issue with rising rentals costs are short-term rentals like Airbnb and other sites keeping available units out of the larger housing stock, which is “already-depleted.” Additionally, Johnson said HOAs across Florida have rules against owners renting their units out during the first year of residency, or banning it outright.
“Both of these take away units that could be rented to the public, and it’s the shortage of available units that drives rental rates higher,” Johnson said. “While developers and local governments clearly need to build more units, that’s not the only solution to this problem.”
According to the Index, here’s where the Florida cities sit in the ranks, organized by Premium or Discount percentage, as of November 2022.
| Rank | City | Premium or Discount | Average Rent | Where Rent Should Be | M-o-M Change | Y-o-Y Change |
|---|---|---|---|---|---|---|
| 1 | Cape Coral, Fla. | 18.05% | $2,219.75 | $1,880.39 | 1.95% | 16.19% |
| 2 | Miami, Fla. | 15.96% | $2,787.71 | $2,404.08 | 0.35% | 14.31% |
| 3 | North Port, Fla. | 15.35% | $2,378.82 | $2,062.28 | 3.27% | 9.82% |
| 7 | Tampa, Fla. | 10.87% | $2,108.29 | $1,901.65 | -0.07% | 8.46% |
| 12 | Orlando, Fla. | 9.56% | $2,007.66 | $1,832.48 | -0.52% | 9.54% |
| 14 | Deltona, Fla. | 9.54% | $1,909.08 | $1,742.77 | -0.19% | 12.07% |
| 16 | Palm Bay, Fla. | 9.40% | $2,039.97 | $1,864.76 | -0.37% | 10.82% |
| 18 | Jacksonville, Fla. | 9.14% | $1,773.07 | $1,624.61 | 0.00% | 7.25% |
| 21 | Lakeland, Fla. | 8.79% | $1,878.68 | $1,726.88 | -0.15% | 9.89% |
| N/A | United States | 7.4% | $2,008 | $1,869.72 | -0.41% | 8.42% |
“As a state, we need to realize that the current rental crisis is hurting our economic growth potential and making it increasingly difficult for service workers to live within reasonable distances of their jobs,” Johnson said, highlighting the effect unaffordable housing is having on Florida’s economy.
While rent affordability is a big issue, it’s only one part of the housing crisis that is still affecting Florida.
According to the Beracha and Johnson Index, another FAU real estate analysis tracker, those same nine Florida cities with big rent premiums also have premiums when it comes to the expected price of a home versus its sell price.
| Rank | City | Premium or Discount | Average Sell | Expected Price |
|---|---|---|---|---|
| 1 | Cape Coral, Fla. | 67.48% | $428,059 | $255,588 |
| 2 | Palm Bay, Fla. | 58.51% | $367,584 | $231,897 |
| 4 | Deltona, Fla. | 57.13% | $363,575 | $231,386 |
| 6 | Lakeland, Fla. | 56.42% | $321,783 | $205,723 |
| 7 | Tampa, Fla. | 56.20% | $391,314 | $250,518 |
| 12 | North Port, Fla. | 50.81% | $495,656 | $328,666 |
| 21 | Orlando, Fla. | 47.71% | $402,064 | $272,197 |
| 24 | Jacksonville, Fla. | 45.86% | $378,914 | $259,779 |
| 37 | Miami, Fla. | 38.67% | $472,926 | $341,052 |
I'm Dr. [Your Name], an economist with a specialization in real estate dynamics and market trends. Over the course of my career, I have extensively researched and analyzed housing markets, particularly focusing on rental pricing, factors influencing housing costs, and their broader economic implications. My expertise is not just theoretical; I've actively contributed to studies and indices that shed light on the intricacies of real estate markets.
In light of the recent article on high rent costs in Florida, particularly the study conducted by Florida Atlantic University (FAU), it aligns with my own findings and observations. The Waller, Weeks, and Johnson Rental Index mentioned in the article is a product of the FAU Real Estate Initiative, Florida Gulf Coast University’s Lucas Institute for Real Estate Development & Finance, and the Alabama Center of Real Estate at the University of Alabama. I have closely followed the development of this index and appreciate its comprehensive approach in understanding rental market dynamics.
The index highlights that Florida hosts nine of the 21 most overpriced rental markets in the nation. Cities like Tampa, North Port, and Lakeland are identified as places where renters pay the highest premiums in the U.S. The key factors contributing to these high rental costs, as outlined by the index, include short-term rentals (like Airbnb) and home owners’ association costs.
Dr. Ken Johnson, an economist at FAU, rightly points out the impact of short-term rentals on the overall housing stock, exacerbating the shortage of available units and consequently driving rental rates higher. Additionally, he notes that homeowners' association (HOA) rules in Florida further limit the rental options, as units are either kept off the market for a year or are outright banned from being rented.
The index provides a detailed breakdown of the premium percentages, average rent, where rent should ideally be, and month-over-month and year-over-year changes for various Florida cities, comparing them to the national average. For instance, Cape Coral-Fort Myers renters lead the nation in paying 18.05% above the long-term leasing trend, significantly higher than the national average rental premium of 7.4%.
Moreover, the article touches upon the broader impact of the current rental crisis on Florida's economic growth potential and the challenges it poses for service workers to live within reasonable distances of their jobs.
Beyond the rental market, the Beracha and Johnson Index, another FAU real estate analysis tracker, reveals that the same Florida cities with high rent premiums also experience premiums when it comes to the expected price of a home versus its sell price. This suggests a comprehensive housing crisis, affecting both renters and potential homeowners alike.
In conclusion, the FAU study and indices provide a nuanced understanding of the complex factors contributing to high rent costs in Florida, emphasizing the need for a multifaceted approach to address the ongoing housing crisis in the state.
