Single-Family Rental Prices Could Be Stabilizing

Rents for single-family rental assets continue to grow, but prices could be starting to stabilize, reported CoreLogic, Irvine, Calif.

CoreLogic Principal Economist Molly Boesel said the firm’s national Single-Family Rent Index continues to grow at 2.7 percent year over year, identical to one year ago. “Most metropolitan areas are seeing steady rent increases both month over month and year over year, with southern metros showing the fastest growth,” she said.

But rent prices for lower-end single-family rental assets now outpace higher-end assets, which could indicate that rent growth is stabilizing, CoreLogic said.

The Index analyzes single-family rent price changes nationally and among 20 metropolitan areas. It found that SFR rent prices climbed between 2010 and 2018, but year-over-year rent increases have slowed since peaking at 4.2 percent in February 2016.

High-end rentals–properties with rent prices greater than 125 percent of a region’s median rent–pulled down the national SFR rent growth rate in March, CoreLogic noted. High-end rent prices increased 2.3 percent year-over-year in March while rent prices among lower-end rentals (with rent prices less than 75 percent of the regional median) increased 3.9 percent.

Morningstar Credit Ratings, New York, said the average vacancy rate across single-borrower, single-family rental securitizations improved for the sixth consecutive month in April, declining to 4.1 percent. “The lower vacancy is likely due to fewer winter lease expirations and a continued strong average retention rate,” Morningstar’s SFR Performance Summary said.

Among the largest 20 metropolitan statistical areas, the Houston metro saw the highest vacancy rate at 6.3 percent in April, though it has improved for three consecutive months and is down considerably from 10 percent last October. The Sarasota-Bradenton-Venice, Fla. metro had the next-highest vacancy rate at 5.5 percent.