Redfin Reports Rent Prices Are Dropping Across Florida’s Most Populous Metros

Rhea-AI Summary

Redfin reports a significant decline in rent prices across Florida's most populous metros. Jacksonville leads with a 12.4% decrease in median asking rent, followed by Tampa at 6%, Orlando at 4.8%, and Miami at 3.8%. This trend is echoed in Austin, TX, where rents dropped 12.6%. These reductions are attributed to the high number of apartments built during the pandemic to meet surging demand, resulting in increased competition among property owners. Nationally, the median apartment asking rent rose 0.7% year-over-year in June to $1,654, the highest since October 2022. Despite rising demand, rent growth is due to a surge in newly built apartments. The apartment vacancy rate has increased to 7.8%. Conversely, areas like Virginia Beach and Cincinnati saw rent increases exceeding 12% due to new constructions.

Positive

• National median apartment asking rent rose 0.7% year-over-year to $1,654 in June, the highest since October 2022.

Negative

• Jacksonville’s median asking rent fell 12.4% year-over-year, the largest drop since 2019.
• Tampa's median asking rent declined 6%, Orlando's by 4.8%, and Miami's by 3.8%.
• Austin, TX experienced a 12.6% drop in median asking rent, the largest among 33 metros.
• The apartment vacancy rate increased to 7.8%.

Insights

Market Research Analyst

Florida and Texas are experiencing a significant drop in rent prices, diverging from the national trend. This is largely attributed to an oversupply of apartments built during the pandemic. For retail investors, this indicates a potential shift in demand dynamics within these real estate markets. While national rent prices are stabilizing, investors should be cautious about markets with surplus inventory.

The oversupply means property owners are reducing rents to attract tenants, which could lead to lower rental income for real estate investments in these areas. Additionally, the high vacancy rates, particularly in Texas, suggest a competitive environment where landlords might need to offer concessions, further squeezing profit margins. For long-term investors, this could mean a slow recovery in rental income growth and potential downward pressure on property values.

On the flip side, the increasing rent prices in the Midwest and Northeast, where fewer apartments are being built, reflect a more balanced supply-demand situation. Investors might find more stability and potential for growth in these regions.

Financial Analyst

From a financial perspective, the decrease in rent prices in Florida and Texas can have mixed implications for investors. Real estate investments in these areas might see a decrease in net operating income due to lower rents and potentially higher vacancy rates. This can affect the cash flow and the overall return on investment for real estate portfolios focusing on these regions.

However, for retail investors, this could also present a buying opportunity. Lower rent prices and potential overbuilding might result in more attractive property prices, allowing investors to acquire assets at a discount. If the long-term demand remains strong or recovers, these investments could appreciate over time, providing significant capital gains.

It's important to consider the impact of rising home insurance costs mentioned in the report. In Florida, this could offset any potential gains from lower acquisition costs, as landlords might pass these costs to tenants or absorb them, reducing profit margins.

Asking rents fell a record 12% year over year in Jacksonville last month, and also declined in Tampa, Orlando and Miami. Austin, TX posted a record drop, too.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) —The median apartment asking rent in America rose 0.7% year over year in June to $1,654, the biggest gain in over a year and the highest median price since October 2022. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Florida is bucking the national trend. The Sunshine State’s four most populous metro areas are seeing rent prices decline. Jacksonville’s median asking rent fell 12.4% year over year in June—the metro’s biggest drop in records dating back to 2019. Tampa posted a 6% decline—also the largest on record. In Orlando and Miami, rent prices fell 4.8% and 3.8%, respectively.

Rents are also falling fast in Austin, TX. The median asking rent in the Texas capital decreased a record 12.6% from a year earlier in June—the largest decline among the 33 metros for which Redfin has rent-price data.

Both Florida and Texas built a lot of apartments during the pandemic moving frenzy in an effort to meet surging demand, and now, many property owners are lowering prices to compete for tenants.

Austin issued more multifamily building permits per 10,000 people than anywhere else in the country in 2021-2023, and Jacksonville came in third place, a separate Redfin analysis found. While construction has slowed in many parts of Florida and Texas (and across the country as a whole), metros in the two states continue to top the list of largest building permitters.

“It’s a good time to hunt for bargains if you’re a renter in Florida or Austin,” said Redfin Senior Economist Sheharyar Bokhari. “With so much supply on the market, renters may be able to get concessions like free parking or discounted rent. But renters in Florida should be aware that landlords are grappling with surging home insurance costs, and they may ultimately ask tenants to foot the bill via higher rents.”

Rents may also be falling in these areas because they overheated during the pandemic—causing many residents to get priced out—and are still coming back down to earth. In Tampa, for example, rents surged as much as 37.8% year over year in 2022—more than double the nationwide gain at the time.

Rent Prices Are Inching Up Nationally as Tough Homebuying Market Buoys Rental Demand—But Rising Inventory Is Limiting Price Growth

Demand from young renters, many of whom are opting to continue renting rather than face an increasingly unaffordable homebuying market, is bolstering rent prices nationwide. But so far, price growth has been limited because there are still a lot of new apartments hitting the market to meet that demand. When supply is on the rise, landlords typically don’t have a lot of leeway to jack up prices because they’re working to fill vacancies.

Apartment builders have pumped the brakes on the number of projects they’re starting—multifamily building starts have fallen below their 10-year historical average—but completions are still near their record high because there were so many construction projects kicked off during the pandemic that are just now being finished.

As a result, newly built U.S. apartments are filling up at the slowest pace since 2020, and the apartment vacancy rate stands at 7.8%, up slightly from 7.4% at the start of 2023 and 7% at the start of 2022.

Rents Are Up More Than 12% in Virginia Beach and Cincinnati

In Virginia Beach, VA, the median apartment asking rent rose 12.9% year over year in June—the biggest jump among the 33 metros Redfin analyzed. Next came Cincinnati (12.2%), Washington, D.C. (11.9%), Chicago (11.3%) and Baltimore (10.7%).

Rent prices are rising in many Midwest and Northeast metros because those regions haven’t been building as many apartments as the Sun Belt. The Midwest is also the most affordable region to live in, which helps bolster demand at a time when housing affordability is strained across most of the U.S.

The biggest asking-rent declines were in Austin (-12.6%), Jacksonville (-12.4%), San Diego (-11.4%), San Francisco (-6.1%) and Tampa (-6%).

To view the full report, including charts, methodology and metro-level data, please visit:
https://www.redfin.com/news/rents-fall-in-florida-austin-june-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240710496525/en/

Redfin Journalist Services:

Kenneth Applewhaite

press@redfin.com

Source: Redfin

FAQ

What is the recent trend in rent prices in Florida's major metros?

As of June, Jacksonville, Tampa, Orlando, and Miami have all seen declines in rent prices, with Jacksonville experiencing the largest drop of 12.4%.

How much did the median apartment asking rent rise nationally in June?

The median apartment asking rent rose 0.7% year-over-year in June to $1,654, the highest since October 2022.

What caused the decline in rent prices in Jacksonville?

The decline, which reached 12.4% year-over-year in June, is due to an oversupply of apartments built during the pandemic surge, increasing competition among property owners.

Which U.S. city experienced the largest drop in rent prices according to Redfin's report?

Austin, TX saw the largest drop, with a 12.6% decline in median asking rent year-over-year in June.

What is the current trend in the apartment vacancy rate?

The apartment vacancy rate has risen to 7.8% as of the latest report.

In which cities did rent prices increase significantly?

Virginia Beach, VA, and Cincinnati saw significant increases, with rent prices rising over 12% year-over-year in June.