Single-Family Rents Spiked 9.3% in August

Single-family rents grew 9.3% in August as strong job and income growth, as well as fierce competition for for-sale housing, fueled demand for single-family rentals. It was the biggest year-over-year increase in more than 16 years, according to the CoreLogic Single-Family Rent Index.

High priced rentals climbed the most,10.5%, with low price rentals up 2.4%. Detached rentals, favored by would-be homebuyers either priced out of the sales market, soared 11.7%— nearly double that of the 6.4% for attached units.

Geographically, Miami, with an increase of 21.4%, stood out with the highest year-over-year rent growth of 20 large metro areas, pushing Phoenix (+19.2%) down to the second spot for the first time in almost three years. Chicago had the lowest increase at 1.4%, and Boston (+1.5%) posted positive rent growth for the first time since May 2020.

CoreLogic predicted there will be a similar trend for renters as in the for-sale market—increased migration to less dense and lower cost areas as space and affordability remain top priorities for both groups.

Still, John Burns Consulting recently noted that rising rents haven’t been a deal breaker for many relocating tenants since they are moving from more expensive markets where they were paying even higher rents.

And with the recovery from the pandemic, single-family rent default risk has declined as unemployment lessens.

The average default risk score for single-family rental homes declined by almost 16% from 43.6 to 36.7 in the nation’s 100 largest counties based on property count in six months as of June, according to RealtyTrac Rental Property Risk Report.

In addition, the ratio of counties at above-average default risk also declined.

“We’re seeing a decrease in the RealtyTrac Default Risk Score due to declining unemployment rates, one of the three criteria we analyze for our score,” said RealtyTrac executive vice president Rick Sharga in a prepared statement.