By Gay Cororaton, MIAMI REALTORS Chief Economist
Multifamily rental listings continued to surge in South Florida, causing rents to soften in Miami-Dade and in Broward, based on the combined rental listings on the RentalBeast.com platform and on the Miami Association of REALTORS® Multiple Listing Service.
In Miami-Dade, rental listings rose 73% on a year-over-year basis, to 7,884 active listings. Listings surged across other counties: Broward, (3,099 active listings, +53% y/y), Palm Beach (+ 2,907 units, +181%), Martin (+292 units, +768%), and St. Lucie (+220 units, +344%). On a combined basis, multifamily active listings as of the end of October rose to 16,105 units, up 95% year-over-year.
With the surge in listings, the median multifamily asking rent in Miami-Dade decreased to $2,850 in October (-5.0% y/y), and in Broward, the median multifamily asking rent decreased to $2,195 (-4.6% y/y). However, the median multifamily asking rents continued to ascend to their highest levels in the counties of Palm Beach, at $2,650 (+10.8% y/y); Martin, at $2,220 (+11% y/y); and St. Lucie, at $2,200 (+14% y/y).
Across the four counties, the median asking rents are still very elevated compared to the levels in October 2019 (pre-pandemic): Miami-Dade (+58.3%), Broward (+41.6%), Palm Beach (+60.6%), Martin (+48.0%), and St. Lucie (+71.2%).
Rising Share of Single-family Rentals
Single-family rental listings rose at an even higher pace, at 10,033 units in October 2023, up 161% year-over-year. Single-family rental listings made up a higher share of total active listings in October, at 38.4% (37.4% in September 2022, 31.7% in October 2022).
However, demand is apparently outpacing supply, as single-family asking rents stayed flat or increased in all counties: Miami-Dade (0%), Broward (2.9%), Palm Beach (18.4%), Martin (19.7%), and St. Lucie (8%).
The rising demand for single-family rentals could be associated with the desire for bigger housing units due to hybrid/remote working, multi-generational living and aging-in-place, and the strains of rising mortgage rates and sustained home price appreciation on first-time homebuyers.
Rent-to-Price Ratios Decline, Originations Fall
With softer rent growth and sustained home price appreciation, rent-to-price ratios on condominium/townhomes have climbed down since the beginning of 2022. In Miami-Dade, the rent-to-price ratio edged downwards to 8.4% as of September 2023 from 10% in January 2022.
Falling rent-to-price ratios amid higher borrowing costs have squeezed profitability and scaled back transactions. Nationally, multifamily loan originations volume fell 17% year-over-year in 2023 Q1-Q3, according to the Mortgage Bankers Association. On a positive note, the multifamily sector suffered the least decline in originations volume, compared to office (-33%), industrial (-35%), retail (-67%), and hotel (-76%).
Rental Market Demand Fundamentals are Strong
South Florida’s long-term commercial market outlook remains positive due to its robust economy as the area continues to experience strong job growth, a rebound in population, elevated migration from other states and abroad, and a resurgence in tourism.
Investment transactions are likely to recover in 2024 as the Federal Open Market Committee is likely to slow on its rate hikes with inflation continuing to come down. Except in a scenario where the Israel-Hamas war escalates to a degree that causes an escalation in oil and raw material prices, I expect inflation to continue to slow towards 2.5% by end of 2024, with the 10-year rate likely trending at 3% – 4%. South Florida’s multifamily transactions are poised to rise in 2024 amid favorable financing conditions and an overall favorable economic outlook.
Download the October 2023 South Florida Rental Market Report below.
