Think Slowing Palm Beach Housing Market Means Lower Rents? Better Think Again.

Thinking that the glut in inventory would create rental bargains in the Palm Beach housing market? Not necessarily.

In fact, rental costs, along the Treasure Coast and throughout Palm Beach County, are rising, according to RealFacts, a research firm. In the third quarter, they were up a whopping 9.5 percent on the Treasure Coast, and 5.6 percent in Palm Beach County, compared with a year ago.

That’s despite evidence the number of empty apartments may be rising, too. The average tab for a two-bedroom, two-bath apartment in one of Palm Beach County’s larger apartment communities averages $1,141 a month, according to the report.

And this is not even the end of it, says Jack McCabe of Deerfield Beach-based McCabe Research & Consulting LLC:

“Rents are definitely going to grow.”

What can you expect to pay for 900 square feet in W. Palm Beach?

“You could be looking at somewhere from about $1,050 to $1,100. Six months from now, I would say the chances are it would be closer to $1,150.”

It has topped that in parts of the county.

In Boca Raton, a two-bedroom, two-bath apartment averages $1,342. In Palm Beach Gardens, the monthly tab comes to $1,185, according to RealFacts.

Port St. Lucie and Fort Pierce aren’t much better off. Even as Florida home mortgage rates have risen and pushed home buying demand down, rental prices in that region showed the second-highest increase in the state. The $1,058 average was even higher than the average in the pricey Naples/Marco Island area.

True, there are some unexpected deals.

You can get a two-bedroom, two-bath for $1,100 now, which this time last year you could not have touched for $1,200-1,300. Or how about a two-story, 5,000-square-foot Wellington home for $2,000 a month?

McCabe said he recently came across an apartment complex offering would-be buyers two months of free rent, one of several special incentives he said he hadn’t seen offered in “well over a year.”

Speculators hoping to flip their two-bedroom, two-bath slice of Palm Beach County condo heaven for a fast buck are feeling the pinch.

“People would buy properties thinking they could rent them for what they pay for their Florida mortgage and the world would be good,” he said.

Many can’t, though.

Take the two-bedroom, two-bath condo on Executive Center Drive in West Palm Beach that sold for $231,000 this month. With an 8 percent Florida mortgage loan on a $200,000 note, the monthly bill would be about $1,467.

That’s a few hundred more than the average rent in Palm Beach County, and does not include $4,642 a year in property tax costs, much less association fees or insurance premiums.

The unit rents for less than $1,000 a month.

Owners can shoulder some of the gap, but how long can that last?

Condo owners already groaning under the weight of their investments may facing some new and formidable competition. Now that national apartment firms don’t have to compete with condo developers for land, they are starting to rethink building in South Florida, says Jeff Chamberlin, president of SLC Commercial, which develops multifamily projects.

“We are just starting to hear rumblings,” he said. “There is a certain value to a traditional rental community that is professionally managed and caters to the renter.”