No, Tampa Bay, it’s not your imagination — rents keep going up.
The median rent in the Tampa Bay metro area was around $1,375 per month in January 2021, a 6.9 percent increase compared to the same month last year, according to data from home search site Realtor.com. The company’s analysis included nearly 4,000 rental apartments, condos, townhomes and single-family homes.
Of course, rising rents are hardly atypical for an area where that’s been the norm. But in the past pandemic year, some cities have seen their rents move in the opposite direction.
San Francisco and the San Jose, Calif., metro areas both saw double-digit declines in the median rent year-over-year, and rent in Seattle and Boston were also both down by more than 8 percent, according to Realtor.com. In total, 16 of the country’s 50 largest metro areas had their rents decrease.
Even more unusually, even in the places where rents went down, house prices continued to rise during the same period, an anomaly for two metrics that usually head in the same direction.
“I don’t remember in the last decade and a half when we’ve seen a similar diverging,” said George Ratiu, senior economist at Realtor.com.
The reason? People are moving, he said. Away from dense, expensive urban cores, and to more affordable areas like Tampa Bay. That drives rents up in these residents’ new home cities.
But not all movers are fleeing cross-country. Some are also relocating to their own suburbs, as the same factors pushing people from downtown areas, combined with low interest rates, have prompted some renters to trade apartments for houses, Ratiu said, causing some metro areas to see house prices climb even while rents decrease.
“What we’re seeing is a result of COVID specifically, but not just COVID. It started happening in 2018, 2019,” Ratiu said. “This year, the oldest millennials are turning 40. It’s the age most of them are having families ... this confluence of factors has pushed a lot of demand away from downtowns to suburbs.”
A February report by real estate brokerage Redfin found that the Tampa Bay area had a net inflow of 47,000 people last year, the fourth-highest nationwide, just behind Phoenix, Dallas and Orlando. Meanwhile, New York, Los Angeles and Chicago lost the most residents last year, according to the report, which cited Redfin’s own research in addition to Census data.
One-third of the people who view Tampa Bay listings on Realtor.com are out-of-state, Ratiu said, because many people are looking for places that have good jobs, a high quality of life and housing that’s affordable.
“I think the Tampa Bay area offers those three facets in spades,” Ratiu said.
One soon-to-be new resident is John Eanes, 36, a New Port Richey native who now lives in Seattle and is looking to come back to Tampa Bay.
Eanes works in the hotel industry, and the coronavirus has exacted a heavy toll. Both his grandfathers died of the virus, he said. He also had to lay off most of his team of employees. The losses have prompted him and his husband, who’s also from Clearwater, to want to move closer to family, and they’re excited by how the area has matured in their six-year absence, he said.
But they were surprised by the rent prices when they started their search.
“We were shocked that the rents we were finding in Tampa were the same rents we’ve been paying in Seattle,” Eanes said. “The incomes in Tampa still have not increased enough to be able to afford that.”
Eanes had wanted to live close to downtown, such as in Tampa Heights, but said the rental rates pushed him to look more in the New Tampa area instead.
“Our goal is to rent for one year and then buy something in Tampa,” he said. “If we are going to pay this much in rent we might as well own something.”
Virtually no neighborhood in Tampa Bay has been exempt from rising rents over the past year, according to numbers from CoStar Group, a commercial real estate data company. The rate that Tampa Bay’s rent increased over the past year vastly outpaced the national average, the company found, ranking sixth-highest in the country. That put it higher than every other large market except parts of southern California, Phoenix, Albuquerque, Tucson and Sacramento.
Still, some neighborhoods’ rents have risen faster than others.
Downtown St. Petersburg’s rents rose 5.5 percent over the past year in multifamily apartment buildings, while Downtown Tampa’s increased by 7.7 percent. Rents in Westchase spiked by 12.5 percent, according to CoStar.
But while rising rents are a positive sign for economic development, they also further put the squeeze on lower-income residents who have already been struggling with a lack of affordable housing.
Rebecca Cohn, a staff attorney at Bay Area Legal Services, which offers free legal help to low-income tenants facing eviction, said rising rents plus the economic strain of the pandemic on lower-income brackets are a bad combination.
“For a lot of people, kind of what ends up (happening) is their options become looking at less and less and less quality housing,” she said.
Rick Homans, president and CEO of the Tampa Bay Partnership, a group of regional business leaders, said Tampa Bay often ranks dead last for average wages when his organization analyzes comparable metro areas each year, revealing how workers’ pay is not keeping up with the cost of living.
“The relocation of people on a national level to Tampa Bay is causing a dislocation of people within the Tampa Bay market,” he said.
The Tampa Bay Partnership also produced an equity report which found a huge racial gap when it comes to homeownership — 73 percent of white residents own homes compared to 40 percent of Black residents — suggesting that Black families make up a large portion of the rental market, Homans added.
“As the demand increases for rental properties and the prices go up, these are likely to be some of the first families to be dislocated and having to look for new places to live,” he said.
The harm of rising rents to tenants, coupled with the opportunity to profit on Tampa Bay’s booming apartment real estate, supports the idea that the economy may be in for a “K”-shaped recovery curve, said Shawn Rupp, a managing director at the Tampa office of Colliers International, a commercial real estate services company.
According to that theory, the two prongs of the “K” represents two halves of the economy, one of which is tilting upward — representing how some people and industries will see prosperity “out of the stratosphere,” Rupp said. The downward prong is everyone else, who may struggle to shake off the financial effects of the pandemic longer-term and continue to stagnate.
Rupp described a voracious demand among investors for apartment complexes that’s similar to the fierce competition among buyers in the market for single-family homes. He said they’ve seen 50 to 60 buyers competing in a single sale of a complex.
The most popular types of building, he said, have been “Class B” and “Class C” apartments, which are typically cheaper and lower quality than the higher-end “Class A.” However, investors aren’t buying them to continue offering affordable rents.
“People buying B and C class assets from us today have no intent of keeping those rents at the same rate. They are buying these deals in a way that if they’re not increasing the rent by 15 percent, they’re going to go broke,” Rupp said. “There’s not much of an end in sight for this in the near term.”
The bullish appetite for apartment buildings then leads to a cycle of rising rents, as one building raising their rate leads to a ripple effect on their neighbors, he added. Rupp said he expects many tenants will accept higher rents because they’ll realize “there’s nothing else, short of moving to Ocala.”
Another sign of the rental market’s strength has been an apparent reduction of perks — like a month of free rent, gift cards, or other promotions — that were common earlier in the pandemic, when uncertainty helped grind much of the housing market to a halt.
Those have mostly disappeared. One complex, Manor Riverwalk in Tampa, had previously offered up to two and half months of free rent for new tenants, for example, when the pandemic first set into Florida about a year ago, according to business manager Imaddy Castillo. Now, the rent is going up and there’s a waiting list, she said.
“Tampa Bay has clearly been a benefactor of the pandemic,” said Luis Baez, Rupp’s colleague and also a managing director at Colliers. “It’s a great time to be in Tampa Bay.”
Rupp clarified: “It’s not a great time to be renting low-income housing.”