Rent in large Florida cities is going down due to an oversupply of units

Residents in cities across Florida are seeing a decrease in rent due to an oversupply of apartment units, a contrast with what is happening elsewhere in the United States, where the rental market continues to rise.

Rent prices in general are now 30% higher than they were before the COVID-19 pandemic, and rents were unaffordable in 2022 for 22.4 million households, according to a recent report by the Joint Center for Housing Studies of Harvard University.

But in Florida, those prices have seen a sharp decline due to the oversupply of units across the state's largest cities. According to a real estate report published by Redfin on July 10, Jacksonville saw the most significant drop, with median asking rents decreasing by 12.4% year-over-year.

Tampa, on its end, saw a decline of 6%, while the figure was 4.8% for Orlando. Miami's median asking rent decreased by 3.8%. In contrast, the national median asking rent rose by 0.7% to $1,654, the highest level since October 2022.

Following a surge in arrivals to the state, Florida has tried to keep up with the increased demand by building more apartment units, which has resulted in a surplus of rentals. The city of Jacksonville ranked third in the nation for multifamily building permits per 10,000 people between 2021 and 2023 and, despite a slowdown in new projects, the completion of many existing ones has kept the supply high.

Texas was another state that built large amounts of apartments during the pandemic, and cities like Austin are also seeing a decrease in rent prices. The median asking rent in the Texan capital decreased by a record 12.6% from last year, the largest decline among the 33 metro areas for which Redfin has rent-price data.

Redfin economists argue that the drop in rent prices can also be viewed as a correction from the inflated prices that were seen during the pandemic.

Younger generations are opting to continue renting rather than entering the homebuying market. On October 20, 2023, CNN reported that home sales hit a 13-year low in September 2023, with a large number of would-be buyers being unable to attain a home due to soaring interest rates in addition to expensive houses. In Texas and Florida's case though, price growth has been limited because there are still a lot of new apartments hitting the market to meet that demand.

But despite the sharp decline in rent prices, many markets in Florida remain overvalued. Data collected from the Beracha and Johnson Housing Market Ranking in 2024 found that five of the country's most overvalued markets are in Florida. The largest "premium" paid by renters in Florida was found in Lakeland, followed by Orlando, North Port, Deltona and the city of Miami.