Florida remains trouble spot as U.S. rent prices decline, study says

WEST PALM BEACH, Fla. (CBS12) — Rent increases are slowing nationwide, but Florida remains a trouble spot. That's according to a study released by Florida Atlantic University on Wednesday.

The report shows several metropolitan U.S. cities saw declines in rent prices, but not South Florida.

According to the study, the decline is due in part to more supply hitting the market.

"In our area, we're up year over year, still 16% but last month, rents were virtually flat. And when we look back at six months and nine months ago, most of that 16% of the year-over-year increase is being driven by rent increases that happened six- nine-plus months ago. Most recently the increases have become rather small," said Ken Johnson, Ph.D., FAU College of Business Economist.

Florida realtor, Bonnie Heatzig says part of the problem is that more supply isn't hitting the market.

"Right now we are seeing a very tight rental market. We have very low inventory in the sales market that tends to spill over and put a strain on the rental market as well. So that is in large part why the rental market inventory is very, very low," said Heatzig.

Johnson said he doesn't foresee this trend lasting forever.

"This crisis is going to go on in terms of affordability, but it's not going to be as noticeable or as significant. We're returning to those that trendline but that was gonna happen. It's just a question of how do we go back to the trend and how quickly," said Johnson.

In the U.S. rental rates are down 0.9 percent from September. Despite that slowdown, rental rates in Florida remain elevated.

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“We have people who come down here, seasonally, who want just a piece of Florida during the winter months. We also have people who have sold their homes at the height of the market, and now they don't want to jump in or they can't find them because of the low inventory," said Heatzig.

Rental rates typically increase three to five percent a year, but South Florida has seen severe increases. Many people were priced out of places they'd lived in for years.

It's a situation that many Floridians are struggling to keep up with as more people move to the Sunshine State.

“South Florida is such a desirable place to live and visit and so as a result more and more people come down and they're testing the waters down here. rentals are just very natural first option for people before they decide to strike and buy a home," said Heatzig.

Johnson says the only way the problem will get better is if more housing is built.

"We need to all come together and understand that we have to build more units. It's probably going to mean we're going to have to go on a little more vertical. But we're not going to wake up and look like New York City," said Johnson.

The need for affordable housing in Palm Beach County is high as we not only see rental increases, but also the costs of groceries and gas rise.

Palm Beach County hopes to help relieve some of that stress with affordable housing projects, such as the two the county commission approved in October of 2022.