South Florida Real Estate Market Update……
Financial independence and quality of life seem to be trumping home ownership for people in the South Florida real estate market. Developments in pedestrian-friendly neighborhoods in areas where amenities, entertainment options and new employment opportunities are growing are luring a pool of renters, especially millennials, into the rental markets of the tri-county area of South Florida. A lot of people are selling their big houses in the outlying areas of the cities dotting the coastline and moving into concentrated urban-living situations.
According to the Real Deal, web-based reporting on South Florida real estate news, 10,200 new apartments are expected to come to market in the tri-county region, compared to 8,700 in 2015, marking a 17 percent increase. That includes 5,500 new apartments in Miami-Dade County plus another 4,700 units in Broward County and Palm Beach County combined.
Ten-X.com, a real-estate research platform, reports that apartment vacancies in Miami have been on the rise as of late, reaching 4.7 percent in the third quarter of 2016. While rents are currently at an all-time high, growth has already begun to decelerate. They point to further slowing, predicting annual growth falling below 1 percent by 2019. Though its economy continues to grow, data points to a stabilizing effect that should continue to give multifamily investors pause.
A lot of micro-apartments are coming on the market. These are small units, usually under 500 sq.ft., with many being studios. Rents range from $995 to $2,000 or more a month. Micro units meet the needs of younger people who are remaining single. According to 2015 statistics released by Harvard University’s Joint Center for Housing Studies, adults under age 35 made up 19 percent of U.S. households but less than 10 percent of homeowners.The homeownership rate for 35-44 year olds had fallen most and was down 5.4 percentage points from the 1993 level and back to a level not seen since the 1960s. With renters often spending 40% percent to 50% percent of their salaries on rent alone, these tiny living quarters are a welcomed relief from the higher-priced larger apartments on the market. However, certain land development regulations and zoning codes may have to be revised from the minimum square footage many cities in South Florida currently have on the books. Allowing developers to build smaller apartments will make financial sense for developers and boost affordability for users.
The Harvard study reports there has been record growth in rental demand. The share of US households that rent their housing rose to a 20-year high of 35.5 percent in 2014, marking the 10th consecutive year of robust renter household growth. Renter household growth has averaged 770,000 annually since 2004. While soaring demand is often attributed to the millennials’ preference to rent, households aged 45–64 in fact accounted for about twice the share of renter growth in 2004–2014 than households under the age of 35.
Fort Lauderdale was ranked as the third-best metro market for buyers of multifamily properties, with monthly rent per unit projected to increase from $970 in 2015 to $1,169 in 2019, marking a 20 percent growth. Miami was ranked as the third-best market in the nation for sellers of rental buildings, with monthly rent per apartment projected to increase from $1,240 in 2015 to $1,359 in 2019.