South Florida rental market eases
It's about to get a little easier for South Florida renters -- or at least a little less difficult.
While finding an apartment is still hardly stress-free, the sharp jumps in rental rates of recent years are finally starting to flatten out. There are now more vacancies. And thanks to a weak housing market, some condo and house owners who can't sell have decided to become temporary landlords instead, giving renters more choices.
What it all adds up to is a subtle but distinct change in the direction of the rental market -- one that Florida International University graduate student Heidi Williams has noticed.
Williams, 30, just started renting her 1,030-square-foot Brickell Key condo from an individual owner for $2,100 a month. That's after her agent negotiated $200 off her rent each month.
"I was actually surprised because I've never gotten that break," said Williams, who moved into the two-bedroom, two-bathroom place Monday. "In my mind, they were just saying, `Let's get it rented.' "
Nationwide, the tilt in favor of renters is showing in apartment vacancy rates that have soared to 6.1 percent. In South Florida, vacancy rates are still much lower at about 3.9 percent. However, that's up from 3.4 percent for Miami and 2.7 percent for Fort Lauderdale a year ago.
"Renters are in a stronger position now," said Sam Chandan, chief economist at real estate research firm Reis Inc. "But a vacancy rate of 3.9 percent is still a tight market."
Rental rates are also starting to flatten out. They're still expected to rise about 4 percent this year, according to Jack McCabe, CEO of McCabe Research & Consulting LLC in Deerfield Beach. But that's significantly less than the hikes of 13 percent in 2006 and 8.4 percent in 2005.
Another sign of better times for renters is the return of incentives from landlords desperate for leases. Of 408 large market-rate apartment complexes in Miami-Dade, Broward and Palm Beach countries surveyed by McCabe's firm, about 10 percent offered concessions such as one month's rent and other incentives. That's up from virtually none in 2005 and 2006.
"They don't normally do this unless they see their occupancies drop," McCabe said.
These landlords are now facing competition from a new source of rentals -- condo owners. Some of these owners never planned on renting their condos out, but figure they might as well pay their mortgages through renting while waiting for the housing market to brighten.
Condo owner Emmanuel Fremin didn't intend to be a landlord. Fremin, a New York art dealer, planned to flip the 600-square-foot space he bought two years ago. Then the market slowed. Now he rents the one-bedroom, one-bathroom unit in Miami Beach for $300 a night or $2,000 a week -- and he says he's actually profiting.
"I can cover almost three times my mortgage," said Fremin, adding he makes more money renting than if he sold the place.
There's no way to track exactly how many condo or even house owners have become reluctant landlords. But the vacancy rate for houses and condos in South Florida went up from 2.3 percent in 2005 to 3.4 percent last year -- suggesting more places might be available to renters.
Then there are the new condos coming onto the market, also vacant. Broker Carlos Fonseca of ERA Home Sales & Rentals in Surfside is seeing 10 to 15 percent more new condos available for rent than last year, partly because more buildings opened this year.
Despite the new supply of spaces, apartment developer Jay Jacobson notes, there's still plenty of demand for rentals. The price of housing is still so high that many people have no choice but to rent.
"I don't see it being a devastating impact on the rental market," said Jacobson, a director at condo and apartment rental developer Wood Partners, who works in South Florida.
Delivrine Registre, 23, is finding that South Florida is still expensive, but there are more choices for renters now than when she first arrived two years ago.
After moving from Jacksonville, she looked on Craigslist and ended up renting an apartment for $950 a month plus utilities. But when she looked online again two months ago for a new place, she noticed more rental listings than before.
She decided to rent a room in a Kendall house for about $650 a month -- utilities included.
"There's a big problem in South Florida with finding affordable housing," said Registre, a broadcast writer. "I'm paying a whole lot less renting a room than living on my own."
BY ANGELA TABLAC - Posted on Wed, May. 09, 2007 - Miami Herald