Pandemic Hits Single-Family Rent Prices

CoreLogic, Irvine, Calif., said single-family rent growth reached its slowest rate in a decade during June amid elevated unemployment rates.

The company’s Single-Family Rent Index found a national rent increase of 1.4 percent year-over-year during June, down from a 2.9 percent year-over-year increase in June 2019.

“National rent growth reached its slowest pace in 10 years in June, indicating that, despite the reopening of many local economies, the impacts of the pandemic are continuing to weigh on the rental market,” said CoreLogic Principal Economist Molly Boesel. “While rents slackened across the country, most metro areas maintained an increase in rents compared to this time last year.”

Earlier this year in the months leading up to the coronavirus pandemic rent price growth was stable at an annual average of 3 percent. But growth slowed drastically in May and continued to decline in June.

CoreLogic noted Phoenix had the highest year-over-year increase in single-family rents in June at 5 percent. Phoenix has led this metric for the last 19 months. But Phoenix SFR rent growth has begun to slow in comparison to its average growth rate of 6.5 percent in the first quarter. Tucson, Ariz. experienced the second-highest rent price growth in June with a 2.9 percent gain, followed by Charlotte, N.C. at 2.6 percent.

Honolulu and Los Angeles–which was hit hard by the stalled film and television industry–were the only two major metros to experience an annual decline in rent prices, dropping 1.2 percent and 0.7 percent respectively in June, CoreLogic said.

In a separate report, Fitch Ratings, New York, said while it has recently affirmed single-family rental transactions based on stable performance and increased credit enhancement, improved data transparency could further improve performance projections. “This is especially the case in the evolving coronavirus environment that has generally affected renters more than homeowners and where many SFR borrowers have requested payment relief,” Fitch said.

Fitch called underlying SFR income typically more stable than for average rentals but said better clarity about the underlying property cashflow and potential payment relief details would account for coronavirus-related income and employment stress. The Census Bureau reported 33 percent of all U.S. household renters have “no confidence” or “only slight confidence” in their ability to pay next month’s rent as of July 14. This is up from 29 percent in early May and 31 percent for the week ending June 30.

Meanwhile, the Mortgage Bankers Association found slight delinquency declines for single-family rental properties from April through June. Those delinquencies may increase now that some payment relief programs have expired. Fitch said it has already observed increases in delinquencies and watch-listed loans due to payment relief requests.