Sunday, June 04, 2006
From the Miami Herald - Rent is on the rise
South Floridians troubled by higher rents
BY TODD WRIGHT AND MATTHEW HAGGMAN
twright@MiamiHerald.com
After just a year in their two-bedroom apartment in Plantation, Carl and Pascale Desir were told their rent would go up by $250, to $1,150.
So they moved into a one-bedroom in North Lauderdale. They're now thinking about leaving Florida altogether.
''We had to go smaller to stay in our price range. It doesn't make sense to pay so much just for rent,'' said Carl, 27, a math teacher. ``We know it's a possibility the rent is going to go up here, too. You just can't get settled in anywhere.''
Rental prices are rising across South Florida, as the number of available apartments shrinks and the demand for them grows.
On the supply side, more developers have converted apartment complexes to condos in recent years in hopes of making money in a hot housing market. And fewer new apartments are going up because of high land and construction costs.
At the same time, people need rentals more than ever because homes are so expensive to buy.
The result: Rents are creeping up -- in some cases leaping up by hundreds of dollars a month.
And they're not expected to come down anytime soon -- although the increases may level off, real estate experts report.
South Florida renters, meanwhile, must spend a larger share of their income on housing or make other arrangements to get by -- find a roommate or, like the Desirs, downsize.
''It is almost a perfect storm for affordable housing -- for-sale prices high and rents going higher,'' said Kevin Judd, senior vice president at Apartment Realty Advisors.
Condo conversions are one reason. The number of apartments in complexes with 100 units or more in Miami-Dade, Broward and Palm Beach counties has plunged over the past three years from 175,000 to fewer than 107,000, according to McCabe Research and Consulting in Deerfield Beach. The analysis did not include low-income rentals or figures for Monroe County.
QUICK INCREASE
''I can't think of a time where we have ever seen rental rates increase so dramatically and so quickly,'' analyst Jack McCabe said. In fact, McCabe is organizing vulture funds betting the condo market will tank because of too much condo construction and conversion.
Miami-Dade County would need to add 3,000 apartments every year for the next five years just to get back to 2002 levels, according to a Marcus & Millichap's 2006 report.
But new apartments are expensive to build. Only 610 new apartments are expected in Broward this year -- compared to 2,828 built in 2004, Apartment Realty Advisors reports.
Developer Alan Ojeda opened a rental tower off Brickell Avenue in Miami last year and has rented 202 units at a rate of almost one a day. But he says he could not afford to build the same building today.
HIGH DEMAND
''With today's construction cost and land, there is no way for someone to build a rental and make it work,'' he said.
At the same time, more people want -- or need -- to rent. From January through April, 7,059 rental deals were signed in Broward and Miami-Dade counties, according to the Multiple Listing Service, which lists homes for sale and rent.
That's a 20 percent jump from the same time last year.
That leaves rentals in high demand, and people like Eric Marcos in trouble.
A 23-year-old recent college graduate, Marcos gave up his $1,300-a-month studio apartment and moved in with a friend because he couldn't afford a $100 rent increase.
''It's out of control right now,'' said Marcos, who waits tables at J. Alexander's restaurant in Fort Lauderdale. His friend is also facing an increase.
''It's to the point where you have to move or get a roommate. All I know is prices need to come down,'' Marcos said.
SPIKING FASTER
So far, they haven't. Rent in Broward and Miami-Dade is spiking much faster than in the nation as a whole.
Renters nationwide paid on average 3.9 percent more in March than the previous year. But in Miami-Dade and Broward, the increases were more than 10 percent. The average monthly rent for a two-bedroom Broward apartment topped $1,000 last year. Miami-Dade was not far behind at $969, according to McCabe's report.
Landlords used to offer incentives, including poolside drink service and free massages, in a bid to compete with the red-hot condo market. Not anymore.
''I would offer free parking or $100 towards the first month's rent,'' said Robert Davison, property manager for the 98-unit Summerhill Apartments in Coconut Grove, which has one vacant unit.
''Now, I don't need to do that,'' Davison said.
There may be hope that at least rent hikes won't be as steep in the future.
The supply of apartments may stop shrinking as it becomes more lucrative for owners to rent. In March, an investment group decided to keep a 376-unit complex in North Miami for rentals, instead of converting to condos. And the owners of some condo units may turn them into rentals instead, if they can't find buyers for resale in an increasingly clogged market.
''The jury is still out,'' said veteran real estate analyst Michael Cannon, managing director of Integra Realty Resources in Miami.
That's not much consolation for Howard Moss.
Moss sees the writing on the wall at his apartment complex on Biscayne Boulevard in Miami and is already looking for a new place.
Moss pays about $900 for his two-bedroom apartment, but he said others in his complex have received notices that the rent will be more than $1,000.
`NOWHERE TO GO'
Despite his early start, Moss, a photographer, hasn't found anything cheaper. His lease is up at the end of the year.
''There is nowhere to go unless you settle for less than what you have now,'' he said. ``It's a stressful situation. Everyone needs a stable place to live. It just makes life much easier if you don't have to worry about that.''
BY TODD WRIGHT AND MATTHEW HAGGMAN
twright@MiamiHerald.com
After just a year in their two-bedroom apartment in Plantation, Carl and Pascale Desir were told their rent would go up by $250, to $1,150.
So they moved into a one-bedroom in North Lauderdale. They're now thinking about leaving Florida altogether.
''We had to go smaller to stay in our price range. It doesn't make sense to pay so much just for rent,'' said Carl, 27, a math teacher. ``We know it's a possibility the rent is going to go up here, too. You just can't get settled in anywhere.''
Rental prices are rising across South Florida, as the number of available apartments shrinks and the demand for them grows.
On the supply side, more developers have converted apartment complexes to condos in recent years in hopes of making money in a hot housing market. And fewer new apartments are going up because of high land and construction costs.
At the same time, people need rentals more than ever because homes are so expensive to buy.
The result: Rents are creeping up -- in some cases leaping up by hundreds of dollars a month.
And they're not expected to come down anytime soon -- although the increases may level off, real estate experts report.
South Florida renters, meanwhile, must spend a larger share of their income on housing or make other arrangements to get by -- find a roommate or, like the Desirs, downsize.
''It is almost a perfect storm for affordable housing -- for-sale prices high and rents going higher,'' said Kevin Judd, senior vice president at Apartment Realty Advisors.
Condo conversions are one reason. The number of apartments in complexes with 100 units or more in Miami-Dade, Broward and Palm Beach counties has plunged over the past three years from 175,000 to fewer than 107,000, according to McCabe Research and Consulting in Deerfield Beach. The analysis did not include low-income rentals or figures for Monroe County.
QUICK INCREASE
''I can't think of a time where we have ever seen rental rates increase so dramatically and so quickly,'' analyst Jack McCabe said. In fact, McCabe is organizing vulture funds betting the condo market will tank because of too much condo construction and conversion.
Miami-Dade County would need to add 3,000 apartments every year for the next five years just to get back to 2002 levels, according to a Marcus & Millichap's 2006 report.
But new apartments are expensive to build. Only 610 new apartments are expected in Broward this year -- compared to 2,828 built in 2004, Apartment Realty Advisors reports.
Developer Alan Ojeda opened a rental tower off Brickell Avenue in Miami last year and has rented 202 units at a rate of almost one a day. But he says he could not afford to build the same building today.
HIGH DEMAND
''With today's construction cost and land, there is no way for someone to build a rental and make it work,'' he said.
At the same time, more people want -- or need -- to rent. From January through April, 7,059 rental deals were signed in Broward and Miami-Dade counties, according to the Multiple Listing Service, which lists homes for sale and rent.
That's a 20 percent jump from the same time last year.
That leaves rentals in high demand, and people like Eric Marcos in trouble.
A 23-year-old recent college graduate, Marcos gave up his $1,300-a-month studio apartment and moved in with a friend because he couldn't afford a $100 rent increase.
''It's out of control right now,'' said Marcos, who waits tables at J. Alexander's restaurant in Fort Lauderdale. His friend is also facing an increase.
''It's to the point where you have to move or get a roommate. All I know is prices need to come down,'' Marcos said.
SPIKING FASTER
So far, they haven't. Rent in Broward and Miami-Dade is spiking much faster than in the nation as a whole.
Renters nationwide paid on average 3.9 percent more in March than the previous year. But in Miami-Dade and Broward, the increases were more than 10 percent. The average monthly rent for a two-bedroom Broward apartment topped $1,000 last year. Miami-Dade was not far behind at $969, according to McCabe's report.
Landlords used to offer incentives, including poolside drink service and free massages, in a bid to compete with the red-hot condo market. Not anymore.
''I would offer free parking or $100 towards the first month's rent,'' said Robert Davison, property manager for the 98-unit Summerhill Apartments in Coconut Grove, which has one vacant unit.
''Now, I don't need to do that,'' Davison said.
There may be hope that at least rent hikes won't be as steep in the future.
The supply of apartments may stop shrinking as it becomes more lucrative for owners to rent. In March, an investment group decided to keep a 376-unit complex in North Miami for rentals, instead of converting to condos. And the owners of some condo units may turn them into rentals instead, if they can't find buyers for resale in an increasingly clogged market.
''The jury is still out,'' said veteran real estate analyst Michael Cannon, managing director of Integra Realty Resources in Miami.
That's not much consolation for Howard Moss.
Moss sees the writing on the wall at his apartment complex on Biscayne Boulevard in Miami and is already looking for a new place.
Moss pays about $900 for his two-bedroom apartment, but he said others in his complex have received notices that the rent will be more than $1,000.
`NOWHERE TO GO'
Despite his early start, Moss, a photographer, hasn't found anything cheaper. His lease is up at the end of the year.
''There is nowhere to go unless you settle for less than what you have now,'' he said. ``It's a stressful situation. Everyone needs a stable place to live. It just makes life much easier if you don't have to worry about that.''
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