Sun Belt Cools as Coastal Markets Drive Single-Family Rental Increases

A new CoreLogic report says that single-family rentals saw “slow and steady” rent growth in August. Overall, it was 2.4% year-over-year, the lowest rate recorded since the fall of 2023.

Typically, rents in the asset type are up 0.3% month over month in August, but this year they increased only 0.2%. However, it’s still up by a third since the pandemic.

The firm categorizes SFRs into two different category groups. The first is attached and detached; the second comprises four price tiers: lower-priced (75% or less of regional median), lower-middle (75% to 100% of regional median), higher-middle (100% to 125% of regional median), and higher-priced (125% or more of regional median).

Attached SFRs saw rents grow 2% year-over-year and detached were up 2.3%. High-priced rentals were up by 2.9%; low-priced were down by 0.2%.

Since the pandemic, the once-glowing reputation of multifamily — pumped up then by a flood of cash from investors who didn’t have a good fixed-income outlet, and so looked for alternative investments — has taken a big hit. Heavy development led to excess supply in some big metros, increasing vacancies and depressing rental growth. In the second quarter of 2024, multifamily rents had their steepest drop in five years.

That makes the SLR increases even more interesting in comparison. Not that rent growth is everything as costs also affect net operating income. Maintenance on single properties would likely be more expensive than that for multifamily units. If for no other reason, multiple SFRs would require more time for maintenance work as crews travel from one place to another. It is easier to maintain uniformity of systems in a multifamily building and reduce costs over the use and upkeep of different parts and devices.

Of the 20 top core-based statistical areas that CoreLogic examined, seven had gains of more than 4.0%. Seven had median rents above $3,000.

Some examples of top metros for year-over-year SFR rent growth along with median rental prices are Seattle-Bellevue-Everett, WA (5.8% and $3,507); New York-Jersey City-White Plains, NY (5.5% and $3,346); Washington-Arlington-Alexandria, DC-VA-MD-WV (5.5% and $3,140); Detroit-Dearborn-Livonia, MI (5.4% and $1,755); Boston, MA (4.8% and $3,463); Chicago-Naperville-Arlington Heights, IL (4.6% and $2,648); and Urban Honolulu, HI (4.5% and $3,765).

On the other end of the scale are Austin-Round Rock, TX (-2.3% and $2,180); Phoenix-Meso-Scottsdale, AZ (0% and $2,442); Orlando-Kissimmee-Sanford, FL (0.2% and $2,260); Dallas-Plano-Irving, TX (0.7% and $2,316); Atlanta-Sandy Springs-Roswell, GA (0.7% and $2,110); and Charlotte-Concord-Gastonia, NC-SC (1.0%, $1,977).

In general, “expensive coastal metros” had the highest gains, according to CoreLogic. Sun Belt metros have cooled. Some of the latter have seen total “significant increases” over the past four years, including Miami (55%), Orlando (41%), Phoenix (38%), and Tucson (38%).