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Home | News | Foreclosure | Is the Single-Family Rental Market Set for Decline?
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Is the Single-Family Rental Market Set for Decline?

Over the past couple years, rentals of single-family homes have served as a growing segment of the housing market. However, lately, limited supply and rising home prices are leading to rising rents, thus slowing growth in this market, according to a report from ""CoreLogic."":http://www.corelogic.com/

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In 2012, more than 1 million new renter households were created. According to CoreLogic, this is five times the amount of rental households formed in the entire first half of the last decade.

Supply in both the purchase and single-family rental markets is declining.

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Inventory constraint can be partly attributed to changes in the REO market, where supply is also tight.

Having been on the decline since 2009, single-family rental properties now have about a 2.9-month supply available on the market. For comparison, anything below six months supply in the purchase market is considered low.

The result of tight supply, naturally, is rising prices.

Home prices rose 10 percent from January 2012 to January 2013, and further growth is expected this year. Rents are also on the rise, with annual increases recorded in the past 26 consecutive months, according to CoreLogic.

""The relationship between purchase prices and listing rents typically happens with a 12-month lag due to rental contracts typically being a year or more,"" CoreLogic stated in its report.

Therefore, the firm expects this year's continuation in home price growth to ""exert upward pressure on leased rents into 2014.""

CoreLogic anticipates ""it will take some time before supply catches up with demand.""

""In the meantime,"" the firm said, ""inventory will remain constrained, rents will rise and demand for rentals will decline as the proposition for renting a property becomes more expensive.""

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