Single-Family Rents Up 3.0% Year-over-Year
Rent prices in single-family rental properties increased 3.0 percent year-over-year in October, up from a 2.7 percent rate a year ago, reported CoreLogic, Irvine, Calif.
“Low rental home inventory relative to demand fuels the growth of single-family rent prices,” the company’s Single-Family Rent Index report said.
Single-family rent prices have climbed since 2010, CoreLogic said. But year-over-year rent price increases have slowed since peaking at 4.2 percent in February 2016 and “stabilized” over the last year with a monthly average of 2.9 percent.
CoreLogic Principal Economist Molly Boesel noted while employment growth feeds rent growth, this relationship does not always hold up, “especially for cities with very high rents,” she said. “For example, employment growth in Seattle this October was more than double that of the U.S., but rent growth [in Seattle] during the same time period was weak.”
Of the 20 metros CoreLogic analyzes for the SFRI report, Seattle had consistently ranked among those with the highest rent, “which suggests there is a limit to how much rents can increase,” Boesel said.
Morningstar Credit Ratings, New York, reported the average vacancy rate for single-borrower single-family rental securitizations remained the same in October at 4.8 percent after five consecutive months of increases. The rating firm said the leveling out was likely due to a corresponding 150 basis point decrease in lease expirations between August and September “following a seasonal trend of higher lease expirations and vacancies in the spring and summer months.”
Among the top 20 metros, Houston had the highest single-family rental asset vacancy rate at 6.6 percent in October, down from 6.8 percent in September, followed by metro Denver at 6.5 percent and greater Chicago at 6.0 percent.
Once again lower-end rentals propped up SFR rent growth in October, CoreLogic said. Rent prices in SFR properties with rent prices under 75 percent of the regional median increased 3.9 percent year-over-year while properties with rent prices exceeding 125 percent of a region’s median rent saw only 2.6 percent rent growth. “High-end rent price increases have steadily declined over the last quarter,” the SFRI report said.
Las Vegas had the highest year-over-year increase in single-family rents in October at 6.6 percent, followed closely by Phoenix at 6.4 percent. Orlando experienced the third-highest year-over-year rent increase at 5.3 percent, CoreLogic said.
“Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth,” CoreLogic said.
