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Rental Vacancies Down, But Houston Rate Still Running High

According to Morningstar Credit Ratings, the average vacancy across single-borrower, single-family rental securitizations was down in January 2018, dropping to 5.0 percent from December 2017’s rate of 5.2 percent. Morningstar’s latest Single-Family Rental Research report says the drop is likely due to fewer winter lease expirations. As of December, the average retention rate stood at 79.2 percent (December was the most recent data available at the time of the report’s compilation.

According to Morningstar, the study "isolated the leases starting in a given period and compared the contractual rent in that period with the prior occupied contractual rent. Morningstar then compared this rent change with the year-over-year change in three- and four-bedroom median rents from RentRange. Morningstar weighted the RentRange median rents by geography to match the MSA concentration of the Morningstar single-family rental database."

Morningstar reports that rents continue to trend upwards, rising 2.5 percent in January, previously having risen 2.4 percent in December. However, the blended rent change has remained below 3.0 percent for four months straight. Morningstar’s report explains this as indicating “a willingness by property managers to accept lower rental increases to bolster retention rates and to occupy empty properties.”

The average delinquency rate remained at 0.9 percent for the third consecutive month.

Yet again, the Houston metropolitan statistical area (MSA) had the highest vacancy rate reported among the top 20 MSAs, standing at 8.8 percent for the month of January. Nashville, Tennessee, held second place but did see a decline from 7.5 percent in December to 7.3 percent in January.

You can read the full Morningstar report by clicking here.

For more insights into the state of the single-family rental market, be sure to register for the 2018 Single-Family Rental Summit, scheduled for March 19-21 at the Renaissance Nashville Hotel in Nashville, Tennessee. The event will feature top subject matter experts and skilled SFR practitioners leading discussion panels and training sessions that will answer questions and offer viable solutions related to property acquisition and management, financing, strategies for small, mid-cap, and large investors, and new developments related to technology and professional services. You can find out all the details by clicking here.

About Author: David Wharton

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