2016 Rental Market Update for Investors in Miami and Fort Lauderdale
Eddie Miller - Thursday, November 5, 2015
Today we’re talking to Peter Zalewski from CraneSpotters.com about the rental market. Many investors want to know what we see for the future and how that affects the Miami and Fort Lauderdale markets.
CraneSpotters.com focuses on properties east of I-95 only. West of I-95 is mostly families and people more affected by schools and other things when they’re shopping for rental property. East of I-95, we have a more urban environment. We find younger renters who don’t have kids.
Overall, this rental market is good. Since 2009, we have seen an increase in 60 to 70 percent for rental price per square foot, monthly. This price increase has lit a fire under the developers who have land where they were planning to build condos. Those condos might not have been successful when it came to presales, so they are now turning towards creating rentals. This is driven by the rising rents and the tenant pool, which has increased due to people who perhaps cannot qualify for financing. Rents are still going through the roof, and they have been climbing since 2009. This has led to an increase in rental product. Banks are happy to finance rentals, but they don’t like condos. The market, therefore, is turning to rentals.
When these rental towers come online, we expect rents to either hold or begin to retreat and fall down, which would give today’s landlord advantage to the tenant. Remember that it’s difficult to get data on rentals. Sales are recorded and become public records. Rentals are not required to be reported, so we use the MLS to complete our analysis. You can maybe use Craigslist or Hotpads.com, but there is a lot of bad information out there. Using the MLS, what you will find is that there is a less than six month inventory in every market. Six months of available inventory is the balance. Most markets right now have two to three months of inventory available, so the market isn’t currently balanced. With inventory this low, the landlord or the seller has the advantage. But when the inventory climbs to six months or higher, the buyer or the tenant is able to enjoy the market advantage. Right now the market favors landlords, and the expectation is that within 18 to 24 month, landlords could actually find themselves at a disadvantage. That’s the cycle of real estate.