Single-family rent price growth accelerated in April, researchers say, as demand for more space and outdoor amenities, largely from older millennials, continues to place upward pressure on the market. In the months ahead, expect affordability challenges in the for-sale market to remain, they say, and the market for single-family rentals and build-to-rent communities that accommodate shifting needs across generations to increase.
CoreLogic this week published its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. April 2021 data shows a national rent increase of rent prices for single-family residences increased in April at a rate of 5.3% year over year, the fastest rate in almost 15 years and a 2.4% year-over-year increase in April 2020, and rent growth of detached properties was more than three times rent growth, or 7.9% year-over-year increase in April, compared to growth of 2.2% annually for attached rentals.
CoreLogic cites another survey, which reported 49% of millennials and 64% of baby boomers strongly prefer to live in a single, stand-alone home.
In response, according to the report, developers are turning to options like build-to-rent communities of luxury single-family rentals that appeal to baby boomers looking to downsize and millennials seeking more space without sacrificing needed flexibility as companies determine remote work policies.
"Single-family rent growth showed a strong rebound in April 2021 with all price tiers back above their pre-pandemic rent growth rate,” said Molly Boesel, Principal Economist at CoreLogic. “While rent growth slowed last April at the start of the pandemic, the rate of rent growth this April was running above pre-pandemic levels even when compared with 2019 and shows no signs of diminishing."
CoreLogic breaks its data down to four tiers of rental prices. They found:
- Lower-priced rentals, those at 75% or less than the regional median, were up 3.9% from 3.2% in April 2020.
- Lower-middle-priced rentals, 75%-100% of the regional median price, were up 4.8% from 2.5% during the same period a year prior.
- Higher-middle-priced rentals, those 100%-125% of the regional median, were up 5.1% from 2.3% in April 2020.
- And higher-priced rentals, 125% or more than the regional median, were up 6.1% from 2.2% in the same duration last year.
- Phoenix had April's highest year-over-year increase in single-family rents at 12.2%.
- Tucson, Arizona, had the second-highest rent price growth with a gain of 10.6%.
- Atlanta, which had the lowest unemployment rate of the 20 metro areas, had the fourth-highest year-over-year rent growth of 9.1%.
- Conversely, Boston had an annual decline of 5.9% in rent prices and has experienced the largest decrease in 20 metros’ rent prices for nine consecutive months.