This hurricane-ravaged region of Florida leads the country in paying Premium Renters

A hurricane-ravaged part of Florida is now the most overvalued rental market in the country and is seeing the strongest annual rent growth, while increases in the rest of the country have slowed.

The Cape Coral-Fort Myers metropolitan area, directly affected by Hurricane Ian in late September, supplanted Miami in first place in the “Waller, Weeks and Johnson Index” conducted by researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama. The index measures rent growth and whether tenants are paying a premium or discount based on historical averages.

These tenants paid a 17.37% premium in October, an increase from the 16.86% premium they paid in the Cape Coral area in September. Rents increased by 17.16% compared to October last year, which is slightly lower than the 17.69% of the previous month. Rents rose 1.76% from September to October in the Cape Coral area, the second highest increase behind Spokane, Washington.

Rent is rising nationwide, however, continued to soften in October. The index, which tracks the 100 largest rental markets, is a month behind due to the time needed to complete the analysis. The number of markets with declining month-over-month rents fell from 38 to 70. Springfield, Massachusetts, saw the largest drop at 2.38%, followed by Las Vegas at 1.81%.

Florida’s dominance of the top 10 premiums dwindled somewhat in October. While Cape Coral and Miami are the top two markets, the total number fell from six to five in the top 10, with North Point, Tampa and Orlando making up the other three spots.

“It appears that an increase in supply has helped relieve pressure on rental housing prices across the country – and that’s exactly what needed to happen,” said FAU economist Ken H. Johnson. , in a press release. “Additional supply appears to be coming from the delivery of units under construction, an increase in unit density, and the conversion of many Airbnb-like units to long-term rentals.”

Cape Coral and Spokane were among five markets where rents rose more than 1% between September and October. Fresno, California; North Port, Florida; and McAllen, Texas round out the top five.

“The significant increase in Cape Coral-Fort Myers is very discouraging, but not surprising,” Shelton Weeks, of Florida Gulf Coast University’s Institute for Real Estate Development & Finance, said in a statement.

The researchers had predicts the possibility that rents in the Cape Coral-Fort Myers area may increase due to the number of people displaced after their homes were destroyed by the Category 4 hurricane.

Weeks said “there are signs of recovery, but affordable housing should remain an issue in this market for months to come.”

Demand had outstripped supply before the hurricane hit, albeit narrowly as development closed the gap. There are 3,326 units currently under construction, or approximately 11.6% of all existing units.

The market added 448 apartments in the third quarter. CoStar Data Projects 676 units will be added this quarter.

Meanwhile, officials in Lee County, where Cape Coral and Fort Myers are located, reported in October that more than 5,000 homes were lost and 13,000 suffered major damage from the hurricane.

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