Rent decreased for multifamily dwellers in South Florida since the pandemic
Landlords might finally be cutting multifamily renters a break in South Florida, with Zillow reporting decreased asking rents for new leases since the pandemic.
The average asking rents decreased year-over-year and month-to-month for multifamily units in Miami-Dade, Broward and Palm Beach counties, according to the 2020 April Zillow Real Estate Market Report. Researchers studied rental listings in the Zillow database for 105 of the largest U.S. metro areas by population size. They found that 16 of them had lower rent growth when comparing March 2019 to March 2020 and April 2019 to April 2020.
The average rent in the Miami metro area was $1,881 in April 2020, said Skylar Olsen, senior principal economist at the Seattle-based real estate data and listing company Zillow. Rent grew by 2.6% over April 2019, a decline from the 2.9% rent growth that the metro area saw comparing March 2019 with March 2020.
Researchers also found a decline in rents in month-to-month data, Olsen said. The Miami metro area saw rent increase by 0.1% from March 2019 to April 2019, from an average of $1,832 to $1,833. But rent decreased by 0.3% from March 2020 to April 2020, from an average of $1,886 to $1,881.
“We’re starting to see rent coming down across the country. Part of the reason is that renters are not moving so there are not as many transactions, which aren’t pushing up rents,” Olsen said.
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Rent declined in other metro areas from March 2020 to April 2020: Los Angeles experienced a 0.5% dip, Tampa by 0.1% and Orlando by 0.1%.
Many multifamily renters work in industries deemed nonessential and face rising unemployment and job losses, Olsen said.
But rent increased from March 2020 to April 2020 in some metro areas: New York by 0.1%, Boston by 0.3% and Chicago by 0.1%. However, rents are expected to fall in these cities, Olsen said.
“We are getting weird signals because people are moving at this time,” she said.
South Florida affordable housing and market-rate multifamily developer, Nelson Stabile, expects rent to remain flat for his projects starting in the fourth quarter of 2020 until late 2021 or early 2022, he said. Stabile, principal of the downtown Miami-based private equity and development firm Integra Investments, has a few affordable housing and market-rate multifamily projects in Miami and Fort Lauderdale, with more in the pipeline.
“The economic challenges that this crisis has brought to our economy will force rents to remain the same,” Stabile said. “We are also going to see some people moving from a [new] luxury building to a Class B building. Still, occupancy rates remain important to landlords.”
Still, demand for rental units will continue in South Florida, Stabile said, given the affordability crisis and increase in home values.
Landlords will likely renegotiate rent with existing tenants and make concessions or, in the last resort, lower asking rents for new tenants, Olsen said, in the months ahead.
“Landlords do not have a huge incentive to evict tenants,” she said, “because they have their own maintenance costs, mortgage, and insurance payments for the property.”
Rent concessions and decreases are expected in the months ahead, especially if the jobless benefits package — providing $600 per week through the federal stimulus package — is not extended past July, Olsen said.
“We’re starting to see the softening of rent growth now,” she said, “but the real impact will be down the road if we don’t see an extension of the extra $600 per week in addition to whatever the state gives you.”
This story was originally published May 28, 2020 at 7:00 AM.
