Single-family rent price growth accelerated in June, researchers say, as demand for more space and outdoor amenities 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 to increase.
CoreLogic published its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas, reporting that year-over-year and revealed a "summer spike" as SFR growth increased more than five fold year-over-year.
According to a recent CoreLogic survey, 85% of consumers searching for a home said they prefer single-family homes. Market conditions including high costs and low inventory persist, posing a challenge for those hoping to reside in a single-family home.
“Single-family rent growth accelerated in June, bouncing back from last year’s weak growth,” said Molly Boesel, Principal Economist at CoreLogic. “The recovery was even more pronounced for detached rentals, which had rent growth more than double that of attached rentals. Ultimately, for would-be homebuyers who have been either priced out of the market or unable to find a home in today’s supply-constrained market, detached rentals are overwhelmingly preferred—and remain in high demand.”
Of the metro areas surveyed (see CoreLogic.com for full methodology), Phoenix had the highest year-over-year increase in single-family rents in June at 16.5%. Some tourist destinations that were hard-hit by the pandemic are showing strong signs of recovery, CoreLogic reported, with Las Vegas logging the second-highest rent price growth with a gain of 12.9%. And while Boston has experienced the largest decrease in 20 metros’ rent prices for 11 consecutive months now (with an annual decline of 2.7% in June) the area’s rate of decline is slowing compared to previous months. Tuscon, Arizona; Miami, and Austin also made the top five list of SFR growth.
CoreLogic also examines price tiers as they relate to rent growth and found:
- Lower-priced (75% or less than the regional median): 5.3%, up from 2.3% in June 2020
- Lower-middle priced (75%-100% of the regional median): 6.4%, up from 1.5% in June 2020
- Higher-middle priced (100%-125% of the regional median): 7.1%, up from 1.5% in June 2020
- Higher-priced (125%+ than the regional median): 9.6%, up from 1.2% in June 2020
Investors in build-to-rent communities and homes, as well as all single-family rental investors, are encouraged to attend this fall's Single-Family Rental and Investment Roundtable, part of 2021 Five Star Conference and Expo, September 19-21 at the Hyatt Regency Hotel in Dallas, Texas.