Single-Family Rent Prices Increase 2.9%

Rent prices in single-family rental properties increased 2.9 percent year-over-year in November, remaining on a steady growth path even as home price growth has slowed, reported CoreLogic, Irvine, Calif.

“Unlike [home prices], which has seen a slowdown in growth over the past year, U.S. [SFR] rent growth has remained stable,” said CoreLogic Principal Economist Molly Boesel. “However, long-term rent increases have been lower than long-term home price increases.”

Boesel noted rent prices increased 17 percent over the past five years, compared with a 32 percent increase in home prices over the same period. Low-end single-family rental prices were up 3.8 percent compared to high-end price gains of 2.6 percent, CoreLogic reported. “These lopsided gains between price tiers are common,” Boesel said.

Metro areas with limited new construction, low rental vacancies and strong local economies to attract new employees generally have stronger rent growth, CoreLogic said. For example, Orlando, Fla. and Phoenix both experienced high year-over-year rent growth in November driven by 4.8 percent and 4.2 percent annual employment growth, respectively, compared with a 1.6 percent national employment growth average.

Rent prices in disaster-affected areas such as Houston increased throughout 2018, the CoreLogic Single-Family Rent Index said. But year-over-year growth in Houston slowed to 1 percent in November, down from 2.4 percent in November 2017 after Hurricane Harvey hit the city. “This is the lowest year-over-year rent price increase for Houston since October 2017, when the metro saw its first increase since April 2016,” the report said.

Morningstar Credit Ratings, New York, reported the average vacancy rate for single-borrower single-family rental securitizations declined by 10 basis points in November to 4.6 percent, “following a seasonal trend of lower lease expirations and vacancies in winter months.”

Morningstar also studied potential effects of the federal government shutdown on single-family rental operators. The ratings firm said it expects any ill effects to be “limited and short-term,” noting industry leaders American Homes 4 Rent, Invitation Homes, Progress Residential and Tricon American Homes all announced deferred rent payment plans for federal employees and will waive late fees for tenants who provide verification they have been furloughed because of the shutdown.