Rental prices in the SFR market increased 2.7 percent year-over-year in March, with the pace holding steady with that recorded a year earlier. Prices in the high-end market rose 2.3 percent, compared to an increase of 3.9 percent in the low-end market, according to CoreLogic’s data. CoreLogic considers properties with prices higher than 125 percent of the region’s median rent price as “high end,” while “low end” encompasses all those with rent prices lower than 75 percent of the regional median rent price.
“While prices for low-end rentals are still outpacing the high-end cohort, a decrease in the growth rate could signal that prices are beginning to stabilize,” CoreLogic noted.
Overall, rent prices have been on the rise since 2010. They peaked in February 2016 with a 4.2 percent annual increase and have been slowing since.
“Most metropolitan areas are seeing steady rent increases both month over month and year over year, with southern metros showing the fastest growth,” said Molly Boesel, Principal Economist at CoreLogic.
Some factors that fuel rent price growth are “limited new construction, low rental vacancies, and strong local economies that attract new employees,” according to CoreLogic. Naturally, steadily increasing home values and the ongoing shortages of available housing stock, especially for first-time homebuyers, is also contributing to the uptick of rental prices. People need places to live, but finding them—whether within the purchase or rental space—remains challenging as we approach the halfway mark in 2018.
CoreLogic noted that Orlando and Phoenix both had high year-over-year SFR price growth in March, as well as strong employment growth. Orlando and Phoenix recorded 5.4 percent and 5.2 percent rental price growth over the year in March, respectively, placing them in the No. 2 and No. 3 spots on CoreLogic’s list of SFR price growth across the 20 metros it tracks.
Orlando’s employment growth was 3.5 percent over the year, and Phoenix’s was 3.2 percent. These compare to a national employment growth rate of 1.6 percent, which CoreLogic quoted from the Bureau of Labor Statistics. Rental growth was highest in Las Vegas, which claimed the No. 1 spot on CoreLogic’s Single-Family Rental Index for March with a 5.5 percent increase.
In addition to finding a correlation between strong employment growth and accelerated rental price growth, CoreLogic also noted that “disaster-struck areas” also tended to have high paces of rental price increases. Rental prices in Houston, for example, are up 3.4 percent on an annual basis in March. Houston experienced its first rental price increase since April 2016 in October of last year, according to CoreLogic.
The only metro on the index to chart a decrease in rental price growth was Honolulu, which has recorded price drops for five straight months. March’s decrease was 0.4 percent over the year.
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