Aggressive rent increases over the last several years has placed Tampa as the 13th most expensive rent-to- income ratio of 35.4 percent. Many areas near central Tampa and along the coast range between 35 percent and 45 percent. Rent prices in many areas are higher than ownership costs, which will reduce rental de- mand as renters convert to owners. The CDC has halted residential evictions through the end of 2020. The eviction moratorium is reducing rental inventory on the market and causing rents to continue rising. Month-over-month rental increases for SFR and multifamily are leveling off per data from July. WHERE DO RENTS GO FROMHERE? Tampa Rental Rates Forecast Rent prices were overheating before the pandemic and are begin- ning to slow. The aggressive price increases have increased the rental listing days on market by 18 percent YoY through July. Rental market risks stem from the large number of lower-income jobs affected by the spiking unemploy- ment (primarily renter cohort), and tenants are struggling to keep up with payments. Mid to high-priced rentals will see a drop in demand and price as many areas are less expensive to own than rent. Demand will stay elevated for SFR rentals as families relocate from cramped multifamily structures. Unemployment may remain ele- vated through the end of the year,

income appreciation supported by rising population, job growth, and wage increases. Investors currently looking at Tampa should be cautious with forward-looking rental income esti- mates due to an overheated rental market and high unemployment. Rent prices were already expensive before pandemic effects stalled the economy, and low interest rates have created an environment where it is cheaper to own than rent for many sectors of the market. After seeing value appreciation double over the last eight years, home prices are still moderately priced vs other markets. Even if there is a moderate pullback in the next 1-2 years, we don’t foresee a meltdown like the last recession. Owners have a record amount of equity built up, and a myriad of government programs to work with borrowers and mitigate another foreclosure crisis. Bottom line, the Tampa SFR rental market has good fundamen- tals, but needs a cooling period for the economy to realign. Cash-flow investors can still find deals in the market, but it would be wise to factor in a decrease in rental income for 1-2 years to make sure the numbers pencil on your next investment property. •

reducing the number of qualified tenants and putting further downside pressure on rents. 2020 SFR Rent Price Forecast: -5% to +0% Our 2021 rental forecast has several unpredictable variables in play. Once the eviction moratorium is lifted, this could lead to a significant number of vacancies and a surge in available rental inventory. Additionally, the number of “qual- ified” renters with no eviction or recent job loss will be significantly reduced. Landlords will likely have to lower their requirements to fill vacancies. At the same time, renters in a good financial position are convert - ing to buyers, further reducing rental demand. Similar to the previous recession- ary period, SFR rental rates may stagnate or drop lower until employ- ment and wages recover. If the virus issues abate and all segments of businesses can return to full capaci- ty, this will keep a floor under rental prices. For the market to support higher rents, wages not only need to recover, but also increase above current levels, which could take several years. 2021 SFR Rent Price Forecast: -10% to 0% CONCLUSIONS The Tampa single-family invest- ment market has been a great choice for many years. It has been a favorite target for investors since the last recession for several rea- sons, including strong equity and

Fred Heigold III is the senior data analyst at Altis- ource® / RentRange®, an industry leader in market data and analytics for the single-family rental housing industry.

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