Single-Family Rents Grow 3%
CoreLogic, Irvine, Calif., said rents in single-family rental properties increased 3 percent year-over-year in November.
Rent growth in SFR properties held steady compared to November 2018, the company’s monthly Single-Family Rent Index report said.
Low rental home inventory relative to demand is driving single-family rent price growth, CoreLogic said. Single-family rent prices have climbed since 2010, but year-over-year rent price increases have slowed since peaking at 4 percent in February 2016 and have stabilized in the 3 percent range since early 2019.
But CoreLogic Principal Economist Molly Boesel noted significant regional differences in SFR rent growth. “Strong rent growth in the Southwest reflects strong population growth in this part of the U.S.,” she said. “Arizona ranked third for population growth in 2019 by both number and percentage increase, according to the U.S. Census Bureau. In contrast, Illinois and Hawaii both had a decrease in population in 2019, which could account for the slower rent growth in these regions.”
Among the 20 largest U.S. metros and for the twelfth consecutive month Phoenix had the highest year-over-year increase in single-family rents in November at 6.9 percent (compared to November 2018). Tucson, Ariz. experienced the second-highest rent price growth in November with a 5.7 percent 12-month gain, followed closely by Seattle at 5.4 percent. Miami experienced the lowest rent increases of all metros CoreLogic analyzed at 0.7 percent.
“Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth,” Boesel said. Phoenix and Seattle experienced high year-over-year rent growth in November, driven by the annual employment growth of 2.6 percent and 2.9 percent, respectively, compared with 1.5 percent average national employment growth.
Morningstar Credit Ratings LLC, New York, said the average vacancy rate for single-borrower single-family rental securitizations decreased to 4.9 percent in November from five percent in October. Morningstar noted the average retention rate for expiring leases decreased 50 basis points in October (the latest data available) to 78.4 percent.