After three long years of drastic hikes, the cost of rent is finally slowing down in Tampa Bay.
Since this time last year, the average rent in Tampa Bay has risen only 4.3%, according to a Tampa Bay Times analysis of Zillow data. That’s a marked improvement from the pandemic, when rents increased more than 25% in a year, amid heavy population growth.
Rent is still growing each year — as of June 30, the average rent for the metro area is $2,154 a month. But the cost is now increasing at a rate closer to pre-pandemic levels, rather than skyrocketing every year.
“It’s a major slowdown,” said Jeff Tucker, senior economist at Zillow. “The pendulum is swinging back in the other direction.”
The same is true for other metro areas in Florida and across the U.S. — especially those that saw the greatest jumps.
In Tampa Bay, rent had jumped 13% from May 2020 to May 2021, then another 25% the following year.
Similarly, in the Miami area, rent increased 11.5% and then 31%. But since May 2022, it has increased only 4% there, according to Zillow.
The welcomed change of pace is likely due to increased housing stock and a sharp decline in prospective renters. Real estate researchers believe rent finally reached a point where it was too expensive in an already challenging economy. More tenants are choosing to delay major expenses like renting a new unit.
“Inflation has eaten up people’s paychecks,” Tucker said. “People are trying to tighten their belts when it comes to their household finances, and one of the best ways to save is to have a roommate or move back in with families.”
At the same time, a record number of new apartments are slated for completion across the U.S. in 2023 and 2024, propelled by lower pandemic interest rates in capital financing. This includes the Tampa Bay region’s frenzy of high-end apartment construction in recent years.
Developments with luxury amenities tend to charge more, but overall, the creation of more available units stymied the soaring rent of the last few years, said Kristine Smale, a senior vice president for the housing research firm Zonda.
Data from the rental listing platform Apartment List confirms more homes are empty in Tampa Bay. About 8% of available units in the area are vacant — more than double the rate in 2021, which had plummeted to 3%. More of the rental supply is vacant today than even before the pandemic surge.
“There are just not a lot of rental households that are eager to move now,” said Rob Warnock, a senior research associate at Apartment List. “New households are not forming as quickly as they have, historically. … People (are) looking to move at a lower rate than they have historically.”
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Tampa Bay saw some of the nation’s highest rental increases in the first two years of the pandemic. Real estate experts say the rent spike was caused by a myriad of factors, including a sharp influx of new renters relocating to the region.
Many would-be homebuyers were also forced into the rental market due to construction delays of single family homes, said Smale. As the share of available rental units decreased, prices went up.
“We’re still seeing new prospective renters that are moving here,” she said. “But during COVID, when we had so many people moving here and building a house, some of them were forced to become temporary renters.”
From June 2020, Zillow data shows the average rent in the region climbed 43% over two years, from $1,460 to $2,089 a month. For some individual cities, the hike was even more steep.
Among 29 Tampa Bay communities with available data, Spring Hill, which is in both Pasco and Hernando counties, had the highest increase during the period — 59% — going from an average of $1,305 to $1,920.
“It’s worth stating the obvious: Rent decreases this year are an order of magnitude higher than increases in previous years, but it’s not undoing a lot of the ridiculous rent increases that took place before,” Warnock said.
And although the rate of increase has lagged, the actual cost of rent remains high for most tenants, especially while grappling with inflated grocery, gas and utility costs.
“It’s still a bit of a squeeze,” Smale said. “All the governments know that affordability is a big challenge. If we can’t have affordable housing, we’re going to impede our own growth.”
The reprieve is also unlikely to last, she noted. Interest rates to obtain capital financing for developments have already increased from pandemic levels, meaning developers have fewer new buildings planned after 2024. There could once again be a shortage in available, affordable units.
“We’ve got more supply this year and next year, but (after that), it will be tight,” Smale said.
The Tampa Bay Times has a team of reporters focusing on rising costs in our region. If you have an idea, question or story to tell, please email us at email@example.com.
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