Single-Family Rent Growth Marks Highest Increase for 15 Years
Strong rent growth this year will continue as supply shortages in the for-sale housing market and ongoing demographic pressure from aging millennials persist.
Single family rent growth was up 5.3%, the highest increase in 15 years, according to the latest CoreLogic Single-Family Rent Index.
Strong rent growth this year will continue as supply shortages in the for-sale housing market and ongoing demographic pressure from aging millennials persist, the company’s analysts said.
The rate of increases slowed in 2020, but even when compared with 2019, rent growth is running above pre-pandemic levels, CoreLogic noted.
It also found that rents in high-priced properties climbed at a faster clip than for low-priced units. Higher-priced rentals rose 6.1% in April 2021, up from a gain of 2.2% in April 2020 while low-end properties increased 3.9% year over year in April 2021, up from 3.2% in April 2020.
The increases were particularly strong for detached rentals which had highly desired outdoor amenities and larger living quarters. These properties experienced accelerated growth with a 7.9% year-over-year increase in April, compared to growth of 2.2% annually for attached rentals.
Among large metro areas, growth was largest in Phoenix with an increase of 12.2%, followed by Tucson, Arizona (+10.6%) and Las Vegas, Nevada (+9.3%).
At the bottom of the heap, Boston showed a decline of 5.9% and Chicago a decrease of 2.6%.
The CoreLogic index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.
Investors are increasing their purchases of single-family homes in part because of the shortage of homes, and with the larger number of families renting, these assets are a good way to invest cash on hand and then rent out the properties to gain ongoing revenue, Redfin senior economist Sheharyar Bokhari has said.
“We’ve seen a lot more international inflow and institutional inflow of capital,” Joel Sanders, founder of Nashville-based apartment location service Apartment Insiders, told dGlobeSt.com in an earlier interview. “Also, it takes less capital to buy a single-family rental and the mortgage rates are favorable.”