Miami Now Has The Hottest Rental Market In The United States

 
The Summer of 2023 is hot in Miami, and in more ways than just the weather!

Starting off 2023, RentCafe ran a study of the top rental markets among major cities across the United States. At the time, only New Jersey slightly inched past Miami in terms of competitiveness for rental properties in the first quarter. Fast forward to today, and the tides have turned. Miami’s historically low vacancy has caused a decrease in the supply of available properties, paired with ever-increasing demand, pushing us into the #1 slot as the Most Competitive Rental Market.

Let’s break down how we got here, and how to succeed in this environment if you need to move…

The Rush of Demand

His critics can say what they wish about Mayor Suarez, but nobody can take away the fact that he is a champion for business in Miami. He has created a business-friendly atmosphere that has caused a mass migration from cities including both New York and Chicago. The movement of these companies has expanded our job market beyond the historically-common tourism and real estate sectors. We are now a burgeoning tech hub and even considered an emerging global city in a new book that was recently published.

This swarm of new professionals arriving to the city is joining the swarm of migrants from that arrived in Miami during COVID, seeking a more laid-back lifestyle and remote working environment. The current statistics show that for each available rental option, there are 24 prospective tenants. This figure is nearly double the demand of North Jersey, the second most in-demand market in the country.

Developers are working as quickly as possible to bring new apartment and condo options to the marketplace, but these new buildings are not constructed overnight. A new high rise takes at least 24-months to construct, considering one floor per week is added to vertical construction. Developers were not yet caught up with the COVID-era demand when the new professionals began to arrive.

These are excellent problems to have, we are of the mindset that growth is good, but it comes with growing pains and this surge of demand is showing no signs of letting up anytime soon. As long as crime and taxes increase up north, those who are able will migrate to the south and Miami is mighty attractive.

Aerial View of Ritz-Carlton Residences Coconut Grove

The Supply Crunch

We touched on this a bit above, but the short supply issue we are faced with is more than just the fact that developers cannot finish new towers quickly enough. We are also faced with historically low vacancy because people in Miami are just not moving the way they used to.

According to the RentCafe.com survey, almost 72% of renters renewed their most recent leases, a figure that typically rests slightly lower than 60%. The market has changed so quickly that those who are situated in the most desirable neighborhoods are no longer willing to run the risk of losing their spot in the skyline in search of a spot in the latest building to open. Prices have skyrocketed and the newer towers that are opening are astronomically-priced compared to what residents are accustomed to paying. Rather than risking having to move to an emerging neighborhood, more people are staying put.

Another issue we are faced with is that buyers of available condos and homes have increasingly been end-users of the spaces, rather than rental investors. In the past, investors from foreign countries have taken advantage of Miami’s steady demand and availability of purchase opportunities to invest in spaces that are used as rental units. There was a time not so long ago that entire condo towers were almost completely sold out to rental investors. It was a win-win for everyone involved as the neighborhoods were flush with available options for tenants, whether long-term or just until they found a more permanent place to hang their hat. For the investors, their assets remained safe from political fears, or other issues in the investors’ homeland.  Changes in government policies on both sides of the border have slowed this pace, although not brought it to a grinding halt.

Aerial View of Brickell City Centre

The fact that 2023’s Miami condo buyers are increasingly end-users also displaces tenants who have been in their rental condos for years, which leads us back to the demand issue and another tenant jockeying for rental units that just aren’t there. It’s an ongoing cycle that compounds itself, showing no signs of letting up until these new towers start to be delivered to the marketplace.

How To Survive And Thrive In This New Rental Market

For starters, it goes without saying that you need proper representation. Gone are the days where you can peruse the national listing aggregates (Realtor.com and Zillow), calling the number listed on a pretty listing and deciding the following week to move in within the next month. Today’s market requires tenant representation. You need someone whose sole job is to know what is currently available, what is possibly coming available soon, and knows how to sell you as a tenant to the landlord who has an opening coming up. It takes someone organized, knowledgable, professional and dedicated.

Know your budget boundaries and have a clear list of things you need from a rental home followed by a list of things you would like to have. Your Realtor will need to know their boundaries when they go out to do your bidding for you, else you could go out of budget quickly or wind up with a home that does not fit what you need. You will also need to be realistic with the cost of a rental property that embodies all of your “must haves” list.

These tips are not meant to stress you in any way. Any of the agents in The Light Group at Douglas Elliman are knowledgable and can seamlessly guide you into what you need based upon the guidelines we are given by you. Being candid with your agent and realistic with yourself is the best way for a stress and drama-free moving experience.

When working with an agent, also know that every real estate agent you encounter is working with the same inventory of possible options. Working with several agents will only stress you out more. Furthermore, agents are naturally more dedicated to their loyal clients. If you want an agent’s undivided attention and full-service for your home search, it’s a good idea to find someone you trust and work with that person.

If this is your first trip into the Miami property market, you can also prepare yourself for the fact that tenants do not pay their agents. Our service is free to you, the landlords take care of us. We realize that in some other markets, agents are compensated differently, but in Miami real estate representation is free for tenants. We at The Light Group would be honored to help you to bypass the stress and competition that this market brings and get you set up peacefully and seamlessly.

If you need/wish to move and are looking for a Miami rental property, or would like to talk about rental investment opportunities, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com. We would be honored to assist you.