Single-Family Rent Growth Rate Increases Again
CoreLogic, Irvine, Calif., said rent prices in single-family rental properties increased 3.1 percent year-over-year in October, up slightly year over year.
Single-family rents increased 2.8 percent in October 2018, CoreLogic’s Single-Family Rent Index 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 this year.
CoreLogic Principal Economist Molly Boesel noted rent increases in low-end SFR properties continue to outpace those on the high end as newly formed households push up demand for entry-level rentals. “However, high-end rents gained momentum for the sixth consecutive month in October, while low-end rates slowed for the first time in roughly five months, resulting in the narrowest gap in rent growth for these price tiers since 2014,” she said.
October marked the sixty-sixth consecutive month in which low-end rentals propped up national rent growth, CoreLogic said. Rents in SFR properties with rent prices below 75 percent of the regional median increased 3.6 percent year-over-year in October while higher-end assets with rent prices exceeding 125 percent of a region’s median rent increased 2.9 percent.
Among the 20 largest U.S. metros and for the eleventh consecutive month, Phoenix had the highest year-over-year increase in single-family rents in October at 6.8 percent. Seattle outpaced Las Vegas for the second-highest rent price growth with 5.8 percent and 5.4 percent gains, respectively, while Miami experienced the lowest rent increases among large metros at one percent.
Arbor, Uniondale, N.Y., said a “confluence” of factors is driving the SFR market including limited supply due to low inventory, unique market drivers like consumer financial distress and wariness of homeownership, tighter lending standards and millennial preferences for renting as well as significantly growing for-sale housing affordability concerns.
“SFR properties offer access to safe neighborhoods and good school systems, combined with a larger living space than apartments,” Arbor said in a white paper, The Changing Perception of Single-Family Rentals. “In addition, SFR properties tend to be more affordable, as the majority of owners are smaller investors that are looking to maintain occupancy, so they tend to offer lower rents [than professionally managed apartment units].”