SFR Rents Slow to Pre-Pandemic Norms

Rent growth in the single-family rent market didn’t break 3% in November, reaching only 2.7%, according to a CoreLogic report. The results are, they say, in line with changes in SFR rent since the summer of 2023.

SFR rent gains have been dropping since 2022, which makes sense given general market corrections. Also interesting, though, is that the last time there was an overall negative turn in rent rates, when the growth was below zero, was in 2008 through 2010, during the Great Recession. The lows were in the -4% to -5% range.

In 2022, rents grew at a peak of about 15%. Even now, the rates have continued to grow, although at a rate still near 3%.

“More than three years of increasing U.S. single-family rents and the rising costs of other goods have made many renters sensitive to the cost of living,” said Molly Boesel, principal economist for CoreLogic, in prepared remarks. “Many renters are renewing their current leases, and others who are moving are seeking lower-priced alternatives. For example, rents in Austin, Texas climbed by nearly 30% from early 2020 to mid-2023 but have now posted five consecutive months of annual declines. An uptick in newly constructed, multifamily rental properties is contributing to the decrease in single-family prices in Austin, as tenants now have more options.”

One question is whether these accumulated sums are ultimately sustainable. They may be given that the upward spike was over only a couple of years, with growth now slightly below but in line with the much longer trend. But even now, clearly there has been an impact creating more price elasticity among renters, with differential impact depending on geographic location.

“San Diego posted the highest year-over-year increase in single-family rents in November 2023, at 5.6%. Minneapolis registered the second-highest annual gain at 5.2%, followed by Boston at 5.1%,” they wrote. “Austin, Texas (-2.5%) and Miami (-1.1%) posted annual losses.”

CoreLogic presented the following listed breakdown of their price categories, along with the changes in rates from November 2022, a point on the downward slope from the historical high.

• Lower-priced (75% or less than the regional median): up 2.9%, down from 10.1% in November 2022
• Lower-middle priced (75% to 100% of the regional median): up 2.9%, down from 8.2% in November 2022
• Higher-middle priced (100% to 125% of the regional median): up 2.7%, down from 7.4% in November 2022
• Higher-priced (125% or more than the regional median): up 2.1%, down from 6.3% in November 2022
• Attached versus detached: Attached single-family rental prices grew by 3.3% year over year in November, compared with the 2.3% increase for detached rentals.