Rents in Florida are falling rapidly. Is it time for investors to look elsewhere?

A recent Redfin study shows that annual rents in some of Florida’s major cities have dropped significantly. Some real estate investors question whether this is a natural correction or the start of a significant downturn in the Sunshine State. Redfin data shows that Miami and Jacksonville experienced declines in the 5% range, while rents in Orlando and Tampa fell 4.3% and 3.2%, respectively.

Considering that all of these markets have seen increases in rents over the past 12 months, some might say that some sort of decline was inevitable. However, some industry analysts are analyzing the declines in rents and comparing them with other data to speculate that Florida could be in the early stages of a crisis that could shake up Florida’s already-shaken real estate industry. of insurance.

Some worrying data includes that the number of people moving to Florida has dropped dramatically in recent years. Also in 2022, the Florida Chamber of Commerce registered 750,000 new residents versus 500,000 people who moved, leaving a net population gain of 250,000. The Chamber only expects between 225 thousand and 275 thousand new residents in 2024.

Don’t miss:

Firstly, there is a precipitous drop in new residents. Second, once the number of new Florida residents adjusts for relocation purposes, Florida could have a net negative result in terms of population growth. Such an outcome would be disastrous for real estate developers and home builders across Florida, many of whom are still in the midst of implementing new construction to accommodate what they hope will be sustained population growth.

However, nothing goes up without eventually coming down. In Redfin’s analysis, senior economist Sheharyar Bokhari elaborated: “The Sun Belt has built a ton of new apartments in recent years, in part to meet the surge in demand brought on by the flood of people moving in during the pandemic housing boom. the boom is over and now landlords are struggling to fill vacancies, causing rents to fall.”

That said, Redfin’s data reveals a silver lining of sorts for Florida renters. Bokhari’s analysis also noted that more inventory leads to more options and lower prices for renters, when he said, “The good news is that the increase in housing supply in the Sun Belt has improved affordability for renters, which It could be a lesson for other American cities. facing housing affordability challenges.”

The story continues

Trending: Warren Buffett turned his neighbor’s $67,000 savings into a $50 million fortune. How much is it worth today?

It’s also important to note that a combination of high interest rates and the highest home insurance premiums in the country will likely keep hundreds of thousands if not millions of Floridians renting for the foreseeable future. The Redfin study also believes that many Florida renters are delaying home purchases in the state until interest and insurance rates drop.

However, falling rents still pose a problem for real estate investors and developers, especially REITs. Many of its projects in cities like Miami and Jacksonville are budgeted for annual rent increases in the range of 4-6%, which is the exact opposite of what is happening now. If the trend of resident inflows continues to slow, many of these assets will achieve projected returns.

Real estate investors looking for markets with appreciation potential may want to cast a wider search radius than Florida. Nearby markets like Georgia, Alabama, and South Carolina may offer a lower purchase price and greater long-term appreciation potential. Investors may also be well served by looking further north to Midwestern markets such as Indiana and Ohio. It’s always better to be ten minutes early to this party than five minutes late.

Keep reading:

“ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “News & Everything” Trading Tool: Benzinga Pro – Click here to start your 14-day trial now!

Get the latest stock analysis from Benzinga?

This article Rents in Florida are falling rapidly. Is it time for investors to look elsewhere? originally appeared in Benzinga. with

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.