South Florida ranked as one the least affordable places to rent in the nation. The report takes the household’s median income it would take to rent a three-bedroom property. In Miami this is equal to about 43 percent of the median income (not including utilities). The least affordable market was in Bronx County, New York where rents consume up to 69 percent of a person’s median income. The standard “affordable” rent and utilities should take up no more than 30 percent of a household’s income. The average rent in Miami rose 6.3 percent and continue to rise. Rent growths by neighborhoods such as South Beach, Brickell and coastal North Miami exceeded 12 percent. To put this into perspective the 2014 median rental price in South Beach is 27 percent higher than the rate achieved in 2010 according to data from Southeast Florida MLXchange. In an article written by The Real Deal South Florida Real Estate News, Peter Zalewski, discusses how the supply of rental properties in South Beach are less than four months of inventory with a balance market said to be about six months of supply. Thus, you could say we are in a landlord’s market; as a tenant’s market has more months of inventory. http://therealdeal.com/miami/blog/2015/01/30/south-beach-rental-transaction-volume-and-rates-rise-in-2014/
The driving force behind the increasing rental rates is a combination of factors. The high occupancy rates near 95 percent allow owners to raise rents because there is more demand than supply. Also due to the boom in new apartment options as Class A and B buildings have had higher occupancy rates than Class C apartments. Landlords are anticipating future rent increases because of a strong job market and pent-up demand for units. The New York Times says, “The problem threatens to get worse before it gets better.” Demand from high-end renters and buyers, usually foreigners, is so strong in Miami that developers have little incentive to build apartment buildings that would be affordable to someone making the average income in Miami.
However, one can take a step back and wonder with over 3,000 units under construction in Miami will this continue? Also, which neighborhoods will command the strongest rent growth and where we will see a shift of renters seeking more affordable locations? Give us a call today to get our insiders knowledge on purchasing investment rental options in the best neighborhoods of South Florida. www.miamiluxuryrealestatesearch.com firstname.lastname@example.org (305) 741-0407