If you are a landlord, real estate investor, or property manager in the sunshine state, you are most likely interested to know what the future holds for the Florida rental market.
Florida is known as one of the best states to own an investment property, but will the Florida rental market continue to be strong?
As a full-service property management company, we get this question quite frequently, and professionally managing properties in Orlando and Tampa has shown us that there is much more to this question than just a simple “Yes or No.”
So we’ve done a deep dive into the Florida Rental Market and what the future holds for rental properties and rental property investments in the State of Florida.
Factors That Affect the Florida Rental Market
It is difficult to make accurate predictions about the future rental market in Florida, as it will be influenced by numerous uncertain and ever-changing factors.
Some factors that affect the future Florida rental market:
- Economic Conditions
- Population Growth
- Available Rental Inventory
- Cost to Own/Purchase
- Government Policies
The Florida rental market will continue to be strong in the coming years due to the growing population, limited inventory, and lack of affordable housing options as well as record costs of owning or obtaining a Florida Mortgage.
According to Forbes, residents are fleeing states such as California, New York, Illinois, and Pennsylvania and moving to states such as Texas and Florida.
Are Florida Rental Prices Going Down?
Although we have many positive factors that will contribute to a solid rental economy here in Florida, there are still a few factors weighing down on rental rates. Inflation and the cost of living has and will continue to stabilize rental prices Nationally and in Florida.
Over the past two years, Renting a Home was so easy in Florida that if you put a few pictures online, you could rent that property within days.
In today’s Florida rental market, we recommend to our rental property owners that we are now having to be more competitive with the listing price. You can no longer over-list your Florida rental property as prospective tenants are more price conscious of current economic conditions.
“To be competitive in today’s Florida rental market and get your property rented quickly, you need to have a realistic price in mind. If you over-price your rental property, your home will sit for longer and amount to higher vacancy costs. If you’ve purchased your rental property within the past two years, your mortgage payments may be more than what you can get for rent.
An important thing to keep in mind is that the market dictates what you can get for rent, not what your monthly payments are. That is why using a professional property manager is more important now than ever before.” Jacob Peterson, Real Estate Broker at The Listing Real Estate Management.
Will the Florida Housing Rental Market Crash?
There are a lot of people that speculate, “Will the Florida rental real estate market crash?” This topic has been debated thoroughly for the past couple of years due to record housing prices and low-interest rates.
According to the Zumper National Rent Report, Rent prices in Florida are down in all cities except for Tallahassee. Zumper CEO Anthemos Geogiades explains, “Many rental markets will normalize or correct following the steep increases in rent from 2021 to 2022 in the zero rate environment.”
We expect interest rates to increase throughout 2023, which will cause a deceleration in rent prices. The rental market is beginning to reach an inflection point, which may decrease rental prices.
Graph Courtesy of Zumper.
According to Realtor.com’s 2023 housing forecast, more rental homes are expected to enter the rental market, which will lead to decreased rental prices. Inflation and costs will remain high, which “squeezes” prospective renters’ budgets.
In Florida, the rental housing market will not crash, it will, however, Decrease and Stabilize at a healthy rate.
Our professional property management company has seen in recent months that homes are taking longer to lease than in the previous few years.
Florida Rental Market: Increased Government Policies
Florida counties will continue to see more and more rules and regulations that restrict price increases; for example, in the Orlando area, the Orange County Rent Stabilization Ordinance limits rent increases for specific residential rental units in multifamily structures.
Other similar policies that affect the Florida Rental Market:
Orlando, Florida: Rent Stabilization & Renewal Notice
Tampa, Florida: 60-Day Notice of Rent Increase
South Florida: Rent Control
Jacksonville, Florida: Senate Bill 102
With Florida facing an affordable housing crisis, we’ll likely see more frequent policies and local ordinances being enacted.
A Bright Future in Florida’s Rental Market
We believe the Florida rental market will undergo a necessary decrease in rental rates and stabilize at a healthy rate. It is encouraging for Florida rental property owners, investors and tenants because we are finally getting back to normalcy in the Florida rental market.
At the end of the day, your real estate asset is secure and is still the safest investment you can make. Florida will continue to be an excellent state to own a rental property.
Portfolio Building: Buying Rental Property in Florida
As property prices continue to decrease and the overall Florida real estate market turns towards a buyers market, purchasing rental properties in Florida will become increasingly lucrative.
Real estate investors will have more leverage to get a great price for their Florida real estate asset. Buying a rental property in Florida, will become beneficial for first time investors and portfolio investors looking to add rental property investments.
Final Thoughts on the Florida Rental Market
In our opinion, the Florida rental market will continue to be strong and stable for years to come. There will not be a rental market crash but rather a much-needed adjustment. Regardless of the outcome, owning an investment property in Florida will be great and allow investors to get involved in adding to their current rental portfolio.
If you have any questions, feel free to contact our team here at The Listing Real Estate Management, we’re your boutique Orlando property management provider and would love to assist in any way we can. Cheers!