CoreLogic’s SIngle-Family Rent (SFR) Index increased 4.1% since January 2018, according to CoreLogic’s 2018 SFR report [1], noting that low rental home inventory, relative to demand is fueling the growth of single-family rent prices.
“Single-family rentals make up one-half of all residential rentals but are an overlooked segment of the housing market,” said CoreLogic Principal Economist Molly Boesel. “Much like the rest of the housing market, single family rentals are affected by market forces and fell rapidly during the Great Recession. They have since bounced back strongly from their low point in 2010, mirroring house price growth.”
Rents increased 2.8% on average in the first half of 2018, with a cumulative rent growth of 4.2% for high end rentals. THe cumulative rent growth in the Houston area was 3.3%, as the 2016 hurricanes took its toll on coastal areas. Houston’s cumulative growth for the first half of 2018 remained among the lowest of the 20 analyzed metros. Hurricane impacted areas are recovering, and according to CoreLogic, the market saw its first increase of 1.1% in October 2017 and has continued to show impressive year-over-year increases in the first half of 2018, peaking at 4.4% in May 2018 and settling at 3.9% in June 2018.
Rental demand has increased alongside home price increases, and affordability remains a significant issue for young potential buyers.
“High demand and low supply of lower priced single-family rental properties continue to push up rents for this segment of the rental market,” said Boesel. “With these market forces expected to stay in place in the near term, rents on lower-priced rental properties should continue to outpace those of higher-end rental properties.”
More recently, CoreLogic reported [2] that the SFR market has begun to stabilize, with single-family rents up 2.9% year-over-year in March 2019, up from a 2.7% increase in March 2018.
CoreLogic reports that the steady rent growth that began in 2010 has begun to stabilize, fluctuating between 2.7% and 3.1% for the past 12 months. March’s growth was propped up mainly by low-end rentals, defined as properties with rents 75% or less of a region’s median rent. Rents on lower-priced rental homes increased 3.5% year-over-year and rents for higher-priced homes, defined as properties with rents more than 125% of the regional median rent, increased 2.4% year-over-year.