CoreLogic’s latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas, March 2021 data showed a national rent increase of 4.3% year-over-year, up from a 3% year-over-year increase in March 2020.
According to the U.S. Census, the occupancy rates for single-family rentals is at a generational high, which is driving up inventory pressure and, subsequently, rent growth. A recent CoreLogic survey shows that nearly 70% of consumers agree high prices for homes are causing many people to rent. However, as demand continues to drive rent prices higher, affordability challenges lie ahead on the rental front as well, as 36% of consumers already feel rental options in their neighborhood are not very or not-at-all affordable.
“The CoreLogic Single-Family Rent Index shows a preference shift to standalone properties as renters seek more space in less dense areas,” said Molly Boesel, Principal Economist at CoreLogic. “Prior to the pandemic, rents for detached properties and attached properties grew at similar rates. However, starting in June 2020, rent growth for detached properties accelerated and by March, grew at five times the rent growth rate of attached properties.”
The latest report from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau found that housing starts dropped in April 2021, hitting 1.57 million units, down 9.5% from March, but is 67.3% above the April 2020 rate of 938,000. The lack of housing starts is constricting inventory, as those renters on the fence about making a home purchase are forced to remain renters until more inventory is made available or prices dip to more affordable levels.
CoreLogic examined four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
- Lower-priced (75% or less than the regional median): 3.2%, down from 3.8% in March 2020
- Lower-middle priced (75% to 100% of the regional median): 3.7%, up from 3.1% in March 2020
- Higher-middle priced (100% to 125% of the regional median): 4.2%, up from 2.9% in March 2020
- Higher-priced (125% or more than the regional median): 5%, up from 2.8% in March 2020
Regionally, Phoenix had the highest year-over-year increase in single-family rents in March 2021 at 11.4%. Tucson, Arizona, had the second-highest rent price growth with a gain of 10.4%. Atlanta, which had the second-lowest unemployment rate in March among the 20 metro areas, had the third highest year-over-year rent growth of 8.1%. Conversely, Boston had an annual decline of 7.7% in rent prices and has experienced the largest decrease in 20 metros’ rent prices for eight consecutive months.