Single-Family Rental Returns, Rent Burdens Slip

ATTOM Data Solutions, Irvine, Calif., said average single-family rental yields slipped between 2019 and 2020.

Single-family rental property average gross yields–annualized gross rent income divided by median property purchase price–dipped from 8.6 percent last year to 8.4 percent so far in 2020 in the 389 U.S. counties ATTOM studied.

“The business of buying single-family homes for rent has lost a little steam this year across the United States as rents aren’t rising quite as fast as prices for investment rental properties in a majority of the country,” said ATTOM Data Solutions Chief Product Officer Todd Teta. “But from the national perspective, things are generally holding steady for landlords in the single-family home rental market.”

Teta said profit trends are moving in favor of investors in higher-rent counties and against those in lower-rent regions.

ATTOM’s Single-Family Rental Market Report said SFR returns decreased from a year ago in more than half the counties analyzed. Counties with the highest potential annual gross rental yields this year include Baltimore City/County, Md. at 28.9 percent, Cumberland County, N.J., at 20.1 percent and Bibb County, Ga., at 18.2 percent. Counties with the lowest potential annual gross rental yields include San Francisco County at 3.8 percent and San Mateo County, Calif. at 3.8 percent.

Meanwhile, First American Financial Corp., Santa Ana, Calif., said the share of renter households considered “rent-burdened” is slipping a bit. In 2010, more than half of all U.S. renter households spent over 30 percent of their income on rent, HUD’s definition of rent-burdened. That figure peaked in 2011 at nearly 53 percent and declined modestly to 49 percent in 2018, the latest available year of data.

First American Deputy Chief Economist Odeta Kushi noted the share of rent-burdened households declined in 39 of the 50 largest U.S. metros between 2010 and 2018. Cities with the largest declines in rent-burdened households included Detroit, where the share of rent-burdened households declined 16 percent, and Salt Lake City, where they fell 14.8 percent.

“Some common trends emerge when examining the top 10 markets in which the share of rent-burdened households declined the most, including strong wage growth, rising supply of rental properties and low to moderate rates of rent growth,” Kushi said. She noted renter household income currently outpaces rent growth in many high-rent cities.