South Florida spent $12.3 billion on rent in 2019 — but not because rents are rising
Soaring home prices have kept so many locals from buying that renters in Miami-Dade and Broward paid more rent in 2019 than the gross domestic product of the Bahamas.
According to a new study by Zillow, renters in Miami and Fort Lauderdale spent a whopping $12.3 billion in rent in 2019 — a 54.5 percent increase since 2009, when renters forked over $7.9 billion.
But the record-setting amount isn’t just a reflection of ballooning rents. According to Zillow, the current median rent in the Miami-Fort Lauderdale area is $1,876 for apartments of all sizes, up a modest 1.2 percent from December 2018.
Instead, the figure is reflective of the increasing demand for rentals in the face of ever-rising home prices. In October, the median sales price of single-family homes in Miami-Dade jumped 6.8 percent to $365,000 — the 95th consecutive month of increases, according to the Miami Association of Realtors.
In Broward, the median sales price of single-family homes was up 2 percent to $362,000.
Those prices have contributed to a swelling population of renters. According to a recent market study by Florida International University’s Metropolitan Center, Miami-Dade lost 56,584 owner households and gained 95,880 renter households from 2007 to 2017.
“It is tempting for people to say millennials are renting longer because they don’t want commitment and aren’t ready to lay down roots,” said Josh Clark, an economist at Zillow Group who conducted the study.
“But this is really an affordability issue,” he said. “People are getting priced out of traditionally expensive markets and relocating to other cities. Miami is a locus for that. People who want to buy homes are having to move away. Many of those who stay have no choice but rent.”
A national trend
The study, which uses housing vacancy and current population data from the U.S. Census, pegs the total amount paid by renters across the country from 2009-2019 at $4.5 trillion.
In 2019 alone, the total amount paid by renters in the U.S. was $512 billion — almost as much as the total 2018 gross domestic product of Argentina ($518 billion).
The Miami-Fort Lauderdale area clocked in seventh on the list of the 35 largest U.S. metro areas with the highest total amount paid in rents in 2019.
New York City topped the list with $56.5 billion paid in 2019. Los Angeles ($39.1 billion), San Francisco ($16.4 billion), Chicago ($15.2 billion), Washington ($15.1 billion) and Dallas ($13.1 billion) took the top six spots.
But rents in a lot of the top-ranking metros aren’t necessarily rising.
“If you look at the places that have had the lowest rent increases in the last few years, you are talking about glamorous markets such as New York City,” Clark said. “Some of them have even dipped negative. Los Angeles has been stagnant.”
Instead, the study shows that people are fleeing pricey metros to more affordable markets such as Phoenix and Las Vegas, where rents rose 7.5 percent and 5.6 percent from 2018 to 2019, respectively.
Other markets with sharp increases include Austin, where the amount of rent paid from 2009-2019 nearly doubled, from $2.5 billion to $4.7 billion, and Raleigh, which jumped from $1.1 billion to $2 billion over the same time span.
A stable market
William Hardin, dean of the Chapman School of Business at Florida International University, said the combination of stagnant wages, competition from wealthy out-of-town investors and the inability of first-time buyers to come up with a down payment are fueling the sheer volume of South Florida’s rental market.
But overall, rents aren’t rising as dramatically as in other metro markets, because there’s so much product available.
“Rents in the downtown area have already flattened out,” Hardin said. “Everyone tends to focus on the urban core, but the real growth is happening in suburban areas such as Doral or Southwest Dade, even with millennials. Those are bread-and-butter housing units.”
The demand for rentals is not expected to subside soon. According to the real estate research firm CoStar, Miami leads the U.S. in the number of new apartments under construction, with 10.8 percent of its total existing inventory in development, the highest in the nation.
This story was originally published December 13, 2019 at 4:30 AM.
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