The cooling market of American real estate may derail some trends observed over the first two years of the COVID-19 pandemic. This is good news for many tenants who faced a sharp surge in apartment value because of migrating remote workers.
A fresh report from the Florida Atlantic University, the Florida Gulf Coast University, and the University of Alabama says that the average rent will probably reduce in over 100 cities because many New Yorkers who moved to Florida during the pandemic are stargin to leave the Sunshine State.
“In the beginning of the pandemic, these “COVID refugees” increased the demand for Florida rental homes considerably and the rent surged to a historical high, while New York real estate became more affordable,” says Ken Johnson, Economist at Florida Atlantic University. “As these people are now returning home, the rent increase in Florida should slow down, while New York tenants will have to face much higher rates again.”
Fort Myers and Miami are currently considered to be two of the most overestimated rental markets throughout the country. This June, local tenants paid about 29% more than last year. Under normal conditions, the rent grows by approximately 3 – 5% per year.
“Districts with the smallest rent growth are mostly localities with stagnating or reducing population,” explains Shelton Weeks from the Florida Gulf Coast University. “Landlords can charge as much as they want in markets with growing population, i.e. across most of Florida, because there is always someone willing to pay the price.”
Researchers from the above universities forecast that the rent growth occurring in Fort Myers, Miami, and other Florida markets, including Orlando and Tampa, will slow down rapidly next year.