The residential rental market in a part of Southwest Florida struck by a devastating hurricane three months ago is seen as more overvalued as the area remains years away from full recovery.
The Cape Coral-Fort Myers metropolitan area once again topped the list of markets around the country for the highest rent premiums on the "Waller, Weeks and Johnson Index" produced by researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama. The area’s rent premium increased from October’s 17.37% to 18.05% in November.
Hurricane Ian hit Lee County where Cape Coral-Fort Myers is located at the end of September, destroying more than 5,000 homes and severely damaging another 13,000.
Many displaced residents moved north to neighboring Sarasota County, pushing the North Port-Sarasota area’s month-over-month rent growth to the highest in the country at 3.27%, while Cape Coral was third at 1.95%. Year-over-year rent growth in Cape Coral eased some to 16.19% in November from 17.16% last year but is still the highest in the country.
The index reflects the premium or discount renters pay relative to historical rent growth of 3% to 5% annually. Rent growth tends to slow this time of year and pick back up in the spring. Sacramento, California, is the only metropolitan area of the 100 the index tracks where renters are paying a discount. Renters paid 1.31% below the historical average in Sacramento in November.
Ken H. Johnson, a real estate economist with FAU, told CoStar News that the “rent crisis is clearly abating across the country” and that the trend is declining or flattening rents.
Of the 100 markets, 67 saw a decline in November rents compared to the previous month. Scranton, Pennsylvania, had the biggest drop at 2.12% followed by Baton Rouge, Louisiana.
But some of the hottest apartment markets over the past two years made up the rest of the top 10 for biggest rent drops in November from October, including Boise City, Idaho; Raleigh, North Carolina; Austin, Texas; Seattle, Washington; San Jose, California; Greenville, South Carolina; Charleston, South Carolina; and New York City.
Miami, which has been one of the strongest for rent growth among the largest apartment markets, still remains strong but has slowly eased on premiums being paid, falling 16.75% to 15.96%. It is second to Cape Coral-Fort Myers. The North Port-Sarasota market moved up to third with a premium of 15.35%.