MIAMI (CBSMiami) – After years of price hikes, it appears South Florida’s rental market is entering a new era of decline.
Due to a number of issues, including thousands of new rentals opening in Downtown Miami, the market is dropping.
It means good deals for renters, tough times for landlords – and it’s a bizarre turn of events for Miami Beach.
If you want to know what’s happening to Miami’s rental market, look no further than Jill Hornik’s apartment.
“None of this was here,” renter Jill Hornik said. “This entire skyline was clear. I could see all the way to the airport.”
In three years, she’s watched thousands of condos come up in Brickell. Each year her rent skyrocketing – that is until this year.
“It seems that the buildings that are over five years old or so are going down in rent. There is a little bit of an exodus to the newer buildings for renters,” Hornik said.
She shared her discovery with her landlord, who skipped a rent hike this year and instead offered a $50 monthly discount.
“To live in Brickell, I think, it’s better to be a renter at this point. It’s my belief,” Hornik said.
Downtown Miami Rents:
2012 – $2,255
2013 – $2,371
2014 – $2,481
2015 – $2,582
2016 – $2,590
The numbers tell the story.
In 2012 the average rent was $2,225. Every year it has risen roughly a hundred dollars. But in late 2016, the rental market suddenly becoming flat.
“If I were to bet, I would bet that prices are on the way down. I would bet the tenants and buyers are going to have the upper hand probably for the next two or three years,” said real estate broker Peter Zalewski.
Zalewski believes downtown’s rental market is in for a major correction. He points to a flooded condo market, that has roughly 8,000 rentals being constructed right now.
“This is a brand new rental tower that’s just came up. Just behind it that green space, that’s another 700 units that are coming up,” Zalewski said.
Why so many rentals? During the recession, banks wouldn’t finance condos. Rentals on the other hand were a gold mine. Developers went where the financing was.
“We are likely going to go through some growing pains,” Zalewski said.
Meanwhile, Miami Beach, home to some of the most expensive real estate in Florida, has become cheaper to rent than hipper Downtown Miami. Renters on the beach are paying roughly $500 less a month.
Christina Pappas is the residential president of Miami’s Association of Realtors.
She says the other item driving down rental rates is that renters are becoming buyers.
Remember all those people who were foreclosed on during the recession and became renters? The restriction for them to get another home loan, roughly 5 to 7 years, is ending.
“So now that they are out of the time frame, they are instead of saying, ‘I am not going to spend $3,000 paying somebody else’s mortgage or paying somebody else, I’m going to go out and find a mortgage.’ And it’s a rare time in South Florida – it is still cheaper to buy, than it is to rent, especially when you are looking at a 2/2 here on Miami Beach or even in the Brickell downtown area,” Pappas said.
Pappas agrees with Zalewski, 2017 will see rents sliding downwards.
“If you are buyer or a tenant, now is the time to get your revenge from basically overpaying the last few years,” Zalewski said.
For renters like Hornik, it’s given her a lot to think about.
“In the long term you are parting with your money instead of investing in yourself,” she said.
With this rental market changing, it’s important for renters to consider using a realtor to haggle price. Typically you only see what landlords are asking for in rent. Realtors have access to data that shows what renters are actually paying. It can knock your rent down by as much as $6,000 a year!