The rental market in Florida over the past decade has experienced annual double-digit rent growth as well as double-digit home price appreciation. This hyper growth trend is slowing to the point that the Emerald Coast rental market is shifting back to equilibrium. This will provide more rent stability to tenants.
Key Points:
Rental supply and demand shifts will favor renters in 2024
Property owners should act to minimize turnover
Supply and Demand: The reasons for this shift can be understood through simple supply and demand factors. In the context of the Florida rental market, we see several factors affecting both sides of this equation, contributing to the possibility of declining rental rates in 2024.
Supply-Side Factors:
Short-Term Rentals to Long-Term Rentals: Some short-term furnished rentals, like those found on platforms such as Airbnb and VRBO, are beginning to convert into long-term rentals. This is due to demand for short-term rentals decreasing, and local regulations in places like the Emerald Coast have become more burdensome for property investors. Some of these property owners are shifting to long-term rentals, thereby increasing the supply of rental properties in Denver.
New Rental Properties Coming Onto The Market: Some homeowners, when faced with an unexpected decision to potentially sell their home, and may have had no intention of converting that home to a rental property, are now reconsidering their options. Because buyer demand in the Emerald Coast sales market is slowing, and because many homeowners have generational low interest rates in place (some under three percent) on their properties, some are deciding to convert the property to a rental rather than sell it.
New Multifamily Inventory: New multifamily properties are being constructed at a rapid pace. These modern apartments offer amenities that can compete with traditional single-family homes. This transition is driving some demand away from single-family rentals into the multifamily sector.
Demand-Side Factors:
Decreased In Migration: Although Colorado still has more people moving into the state than leaving it, net migration is slowing.
Inflation Impact: Inflation is affecting renters significantly. The Emerald Coast recently experienced the highest Consumer Price Index (CPI) monthly increase along with surrounding areas. Tenants are spending more of their income on everything from food to fashion. This leaves them with less disposable income for rent.
Student Loan Payments: The federal government's decision to resume student loan payments means that many tenants will have to allocate several hundred dollars a month to their previously deferred loans. This further limits their ability to afford higher rents.
What Can Florida Landlords and Real Estate Investors Do?
Given these shifts in the rental market, we recommend five strategies to minimize any negative impact:
Maintain Property Quality: Ensure your rental property is well-maintained, clean, and up-to-date to attract quality residents.
Effective Marketing: Invest in effective marketing to maximize the visibility of your property to prospective tenants. Utilize video tours and premium paid platforms like Zillow for greater exposure.
Competitive Pricing: Offer competitive pricing and move in incentives to attract new tenants. In a market with reduced demand, consider lowering rental rates to fill vacancies.
Realistic Screening: Adjust your applicant screening criteria to be realistic. While you still want quality tenants, consider lowering some standards to fill your units.
Avoid Turnover: Focus on retaining existing tenants. Minimize rent increases and provide excellent service to prevent costly turnovers.
As we look ahead to 2024, the rental market in Florida is shifting with this increase in supply and a decrease in demand. By staying informed and implementing these strategies, landlords and real estate investors can adapt to these changing dynamics and continue to succeed in the rental market.
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