Flat Florida Housing Market Means Spike in Rentals

Struggling to recoup expenses in a weak Florida housing market, real estate investors have been flooding Brevard County with inexpensive rental homes, which causes heartache for apartment operators and bargains galore for apartment dwellers looking to upgrade their digs.

There were currently 1,127 homes available for rent this week in Brevard, according to the Multiple Listing Service. Realtors say that’s more than twice as many as they recall seeing, although the exact number of rental homes in years past is not available.

Sheryl Jones of Century 21 had 60 single-family home listings to rent last year.

This year? She has 130.

“It’s a buyer’s and a renter’s market now,” she said.

Ask Sharon Montano. The Palm Bay resident lived with her three teen sons in a three-bed, $745-a-month unit at Country Garden Apartments until six weeks ago, when she found a four-bedroom home for $945.

“The boys needed a backyard. They couldn’t play on the grass. The kitchen (in the apartment) was really small and I hated cooking. There are so many restrictions in an apartment, and so much comfort in a house,” she said.

As Florida mortgage costs have soared beyond what many can afford, rental demand has risen in the Sunshine State. Although he wishes he didn’t, Ken Myers owns 15 rental homes along the central coast of Florida, including five in Brevard County.

Like many home flippers - people who build or buy homes, improve them if need be and then sell them for a profit - Myers made money for three or four years until the new home market softened about a year ago.

“I was trapped into renting,” he said.

To compete in this market, Myers has to keep rents low, negotiate for less than his monthly costs and even offer the first month free.

“I’ve got Florida mortgages for $2,700 a month, and I’m renting a 3,000-square-foot (house) for $1,200. I’m upside down,” Myers said.

But he’s determined to stick it out until the new-home market levels out.

“Your money is still stronger in real estate - if you can outlive the chest pain.”

The abundance of new homes renting at bargain rates is cutting into the business at apartment complexes. Bob Taylor, manager of Pentagon Garden Apartments in Melbourne, said three people left at the end of January to rent new homes, and he has six notices to vacate.

“Why rent a two-bedroom apartment for $725 when you can have a whole house with three bedrooms for a little more? It’s kind of rough,” he said.

The experiences are similar throughout the Brevard County housing market.

“I came here a year ago to a full house and waiting list and now I need a life preserver,” said Alan Guthrie, manager of the 236-apartment Riviera Terrace Apartments in Palm Bay.

Cindy Riggin, president of the Space Coast Apartment Association, estimates occupancy rates at apartments in the county average 88 percent now, when last summer they hovered near 100 percent.

Several factors are contributing to the soft housing market. New Florida home loan lending policies, for example.

Sue Bergamo with Matrix Lending of Melbourne Beach said until January, even those with bad credit could buy a new home with no money down.

“Now, we’re more particular and a home must be owned for at least three months before it can be put on the market again,” she said.

Some lending agencies require a year.

And flippers often compete with home construction firms for buyers. Myers said he had a home for sale in a development where the home builders offered the same property for $100,000 less.

Franck Kaiser of the Home Builders and Contractors Association of Brevard County blames flippers for artificially increasing the price of homes, causing overpricing and oversupply.

“Homes are still not selling because people think home costs are going lower still,” he said.