The market of rental homes in southern parts of Florida was one of the most active in the USA but higher interest rates on loans pose a threat even to such successful counties as Miami-Dade, Broward, and Palm Beach. Mortgage-financed sales of apartment blocks reduced there.
This is happening as the state is rapidly recovering from the coronavirus pandemic. For instance, from July 2020 through July 2022, half a million new jobs appeared in South Florida (their total number exceeded 3 million). The unemployment rate in this region dropped from 14.5% to 2.6% over the same period, which is an entire percentage point less than the nationwide average, according to the US Bureau of Labor Statistics.
Despite considerable advantages of South Florida, which include low unemployment and population growth, as people are moving here from states with higher taxes, the interest rates raised by the Federal Reserve System five times from March to September made the buyers’ life much more difficult. Investment in apartments is reducing because of higher borrowing costs, while builders are struggling to receive funding.
Brett Forman, Executive Managing Director at Trez Capital (a real estate investment firm), notes that buyers are offering less money, while sellers do not agree with such terms, so the total number of transactions in the market reduces.
The sales of rental homes in apartment blocks in South Florida have surged to $16.7 billion from last June to June of the current year, which is a whopping 176% more than over the previous 12-month period. This data was shared by CBRE, a real estate brokerage. The region’s sales growth rates were the 6th among all US metropolitan areas. South Florida came second by the volume of sales.
High prices of residences in this area increased the demand for rentals, while the growing interest rates on home loans made housing considerably less affordable.