TAMPA, Fla. (WFLA) — In a ranking by the Florida Atlantic University Real Estate Initiative, an analysis of Zillow’s rental data was used to rank the metro areas that were most overvalued, or cost more than they should.
Of the 25 most overpriced markets, 10 were in Florida. Tampa was ranked No. 3, behind just Miami and Fort Myers. The highest five cities were all in Florida.
Two of the cities are in the Tampa Bay area, the Tampa-St. Petersburg-Clearwater and the North Port-Sarasota-Bradenton metros. Lakeland wasn’t far behind at No. 8.
|Rank||City/Market||Average Rent Price||What it Should Be||Premium %|
|1||Miami-Fort Lauderdale, FL||$ 2,832.00||$ 2,325.99||21.75%|
|2||Fort Myers, FL||$ 2,052.00||$ 1,736.68||18.16%|
|3||Tampa, FL||$ 2,029.00||$ 1,732.99||17.08%|
|4||North Port-Sarasota-Bradenton, FL||$ 2,402.00||$ 2,053.40||16.98%|
|5||Port St. Lucie, FL||$ 2,201.00||$ 1,903.88||15.61%|
The ranked cities and markets were listed with a premium, or the percent over what the price should be. FAU said the “should be” price was reported based on “past leasing data from Zillow’s Observed Rent Index,” and historical data of rent over time. Then it was compared to the modeled prices of what expected prices would be, compared to current actual prices.
In addition to Miami, Fort Myers, Tampa, Sarasota and Port St. Lucie, the top 25 also had Lakeland, Daytona Beach, Jacksonville, Orlando and Melbourne as Florida cities in the list. Melbourne had the lowest level premium on rent costs of the Florida cities, at 12.45%.
With the exception of Port St. Lucie, all of the cities listed were also ranked in FAU’s Beracha and Johnson Housing Market Index of overvalued home purchase prices.
“Florida is a popular destination under normal circumstances, and it’s even more desirable now because its pandemic policies strongly favored consumers and businesses,” Ken. H. Johnson, Ph.D., an economist in FAU’s College of Business said in a release accompanying the rental analysis. “Landlords can charge exorbitant rents because if the existing tenants do not accept the new lease terms, other people will accept them quickly. This all points back to a persistent inventory shortage in rental units.”
Johnson and partners at the University of Alabama and Florida Gulf Coast University said the rent increase is partly because of “robust demand from out-of-state transplants” and a continued issue of developers “struggling” to build more housing units. The builder slow-down is due to “supply chain shortages and rising materials costs.”
As inflation has continued to rise in the U.S., and across the globe, amid supply chain shortages and complications, mortgages have risen with the Federal Reserve increasing interest rates.
“The recent rent increases are unusual because rents tend to be less volatile than housing prices, which are more reactionary to external forces, such as mortgage rate changes, according to the researchers,” the statement said.
The cost of rent is still on an upward swing. Miami remains the most expensive place to rent in Florida’s “major cities,” according to ApartmentList. A one-bedroom apartment in Miami has a median rental cost of $1,656, while the same report showed a two-bedroom is as much as $2,163 per month. Miami’s rental prices have reportedly risen 17 months straight, without a single reported decline since November 2020.
“Tampa rents have increased 0.6% over the past month, and are up sharply by 27.6% in comparison to the same time last year. Currently, median rents in Tampa stand at $1,484 for a one-bedroom apartment and $1,810 for a two-bedroom,” according to ApartmentList. “This is the fourth straight month that the city has seen rent increases after a decline in December of last year. Tampa’s year-over-year rent growth lags the state average of 28.0%, but exceeds the national average of 16.3%.”
Compared to the rest of the United States, rent costs are much higher in Tampa. Nationally, rent has only increased 16.3% and the average two-bedroom rent is $1,319 compared to Tampa’s $1,810.