A new study from Florida Atlantic University, Florida Gulf Coast University and the University of Alabama ranked the most overvalued US rental markets. The researchers used past leasing data from Zillow’s Observed Rental Index to statistically model historic trends from 2014 and determine where rents should be and compare those to current rents. The difference between the two is the premium renters are paying.
Perhaps not surprisingly given the migration to the Sun Belt states in recent years, the first five all are in the Sunshine State. Indeed, the researchers believe that rents have increased sharply in Florida during the pandemic due to robust demand from out-of-state transplants.
“Florida is a popular destination under normal circumstances, and it’s even more desirable now because its pandemic policies strongly favored consumers and businesses,” said Ken. H. Johnson, an economist in FAU’s College of Business. “Landlords can charge exorbitant rents because if the existing tenants do not accept the new lease terms, other people will accept them quickly. This all points back to a persistent inventory shortage in rental units.”
Florida cities are not the only ones on this list. Other metro areas, such as Knoxville and Phoenix, have also proven to be popular with out-of-state residents as well. Boise City, interestingly, you won’t find on the list. Once at the top of many lists of high rent growth markets, it ranks No. 25. It has an average rent of $1,777. The rent should be, according to the researchers, $1,600.62 for a 11.02% premium.
The following slideshows ranks the most overvalued rental markets in the US.
The average rent in Miami-Fort Lauderdale is $2,832. It should be $2,325.99, for a 21.75% premium.
The average rent in Fort Myers, FL is $2,052. It should be $1,736.68 for a 18.16% premium.
The average rent in Tampa, FL is $2,029. It should be $1,732.00 for a 17.08% premium.
The average rent in North Port-Sarasota-Bradenton, FL is $2,402. It should be $2,053.40 for a 16.98% premium.
The average rent in Port St. Lucie, FL is $2,201. It should be $1,903.88 for a 15.61% premium.
The average rent in Killeen, TX is $1,322. It should be $1,145 for a 15.46% premium.
The average rent in Bakersfield, CA is $1,688. It should be $1,473.93 for a 14.52% premium.
The average rent in Lakeland, FL is $1,808. It should be $1,579.56 for a 14.46% premium.
The average rent in Phoenix, AZ is $1,921. It should be $1,678.87 for a 14.42% premium.
The average rent in Knoxville, TN is $1,526. It should be $1,334.69 for a 14.33% premium.
