MIAMI – March 8, 2013 – South Florida renters are opening their wallets wider as robust demand has allowed landlords to seize control of the market.
The average monthly apartment rental rate in Palm Beach County last year was $1,154, a 4 percent jump since 2008, according to a report this week from CBRE. The real estate firm predicts a double-digit increase through 2017.
“The long and short of it is that supply is not keeping up with demand right now,” said Calum Weaver, a broker with CBRE in Fort Lauderdale.
Broward County’s average rent also has risen 4 percent since 2008, hitting $1,203 last year, according to CBRE.
All across the region, young professionals are finding pricey rents and a crowded market.
Lauren Odom graduated last year from the University of North Carolina and moved in with a friend and her family in Boca Raton to save enough money before renting an apartment.
Odom, 22, quickly became disillusioned when many of the places she liked were unaffordable. She ended up renting a one-bedroom duplex in Wilton Manors for $1,050 a month – within her budget but still more than she wanted to pay.
“It was very, very stressful,” said Odom, an account executive for a local public relations firm. “You see all these places that you think you should be able to afford. It was a reality shock.”
Those leasing single-family homes, condominiums and townhomes also are feeling the squeeze.
Saul Cooper, a 39-year-old Deerfield Beach sales manager, has been renting a three-bedroom townhome at Mizner on the Green in Boca Raton for five years. He said he faced small rent increases until last year, when he had to pay $250 more a month.
“They can get away with it because there’s never any vacancy,” Cooper said. “I was very close to leaving, but I really like the location and I didn’t want to pick up and move. But if it goes up again, I’m out.”
Many former homeowners have become renters since the housing collapse. They either want no part of owning or are forced into apartments because they can’t qualify for mortgages.
While the cost of homeownership beats renting, investor demand is driving up home prices.
“Although low mortgage rates still make buying cheaper than renting in South Florida, some renters will decide against buying now that homeownership is not as affordable today as it was a year ago,” Jed Kolko, chief economist for real estate website Trulia.com, said in a statement.
Meanwhile, the region’s apartment market still hasn’t fully recovered from the loss of roughly 60,000 units that were converted to condos near the peak of the housing boom in 2005, CBRE’s Weaver said.
Developers have proposed more than 50 apartment communities across South Florida, but most of those won’t be built for a year or two, said Jack McCabe, a Deerfield Beach housing consultant.
McCabe agrees that apartment rents will rise in the near term, but he’s not so sure the trend will continue five years out. Mortgages could be easier to get if lenders gradually loosen restrictions, pushing more people back into homeownership. And overbuilding is a distinct possibility, and that would force down rental rates in a hurry, McCabe said.
“It’s nice to project out into the future, but we’re still in a volatile and tumultuous marketplace that’s subject to potentially radical changes,” he said.
Copyright © 2013 the Sun Sentinel (Fort Lauderdale, Fla.), Paul Owers. Distributed by MCT Information Services.