The world laughed when Jimmy McMillan ran for New York City mayor with the slogan "The rent is too damn high!" Yet how many of us now repeat that line verbatim whenever we cut our landlord a check or browse apartment listings in Miami? They are, indeed, categorically, undoubtedly too damn high.
In fact, they might be too damn high for the market to sustain. New data suggests Miami's average rental rates have already begun to dip and may experience even further drops.
The first bit comes from real-estate website Abodo, which releases its monthly National Apartment Report. The latest report found that the average rent for a one-bedroom apartment in Miami fell 3 percent between April and May. It was the eighth-largest dip of any market in the nation.
Granted, that's just a month-to-month snapshot, but Abodo spokesman Sam
"With construction at its highest level since the 1980s, we believe that a steady decline in rent prices in metro areas like Miami might be on the way," Radbil says. "Developers delivered 250,000 new rentals in 2015, and the forecast is for 285,000 more units to be finished in 2016. As we've seen in the past, as the supply of rental units increases, prices should begin to decrease."
“Miami, specifically, is following a trend that analysts and industry experts have seen in many U.S. cities. Young adults either can’t afford to buy a home or they don’t want to be bothered with the hassle of owning one. This has led to more demand for rentals and an increase in rent price. But as more developments are completed in 2016, renters may get relief from extremely high prices because of the abundance of rental options in large metro areas like Miami."
Another report, from Andrew Stearns of Stat Funding (via Curbed Miami), also points to the possibility of tumbling rents.
Miami's condo sales market is slowing as demand lessens, yet developers are still pumping new units into the market at breakneck speed. Previous analysis already suggests condo prices in Miami should begin to fall by the end of the year.
That means buyers who scooped up apartments for investment properties may have a difficult time flipping them for a profit, so they may put the units on the rental market instead.
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"Rents will likely tumble as preconstruction buyers unwilling to take losses on their condos flood the rental market with new units," the report reads.
But those owners may have a hard time finding anyone to pay top-market rents for those units, meaning that some who "choose to rent their units will have to rent for an operating loss... resulting in negative carry/negative cash flow."
So properties bought by foreigners as an investment or pied-à-terre may soon be put on the rental market at a bargain. Add to this the fact, as the Miami Herald reported earlier this week, that Miami developers are now turning away from the ultra-luxury market to rental properties, and the market will soon be flooded with reasonably priced rentals.