According to the latest Single-Family Rental Research report from Morningstar Credit Ratings, LLC the vacancy rate for single-borrower, single-family rental transactions increased in October to 5.2 percent from 5.0 percent in the month prior. This rate was a slight decrease from 2015, though, at 5.3 percent. Morningstar credits this increase to transactions working through the summer’s growth in lease expirations.
“Given the current lease expiration cycle, this trend may repeat itself in the coming year,” says Morningstar.
The report also notes that delinquency rates in single-family rental securitizations was unmoved at 0.6 percent for the fourth consecutive month.
Broken down by metropolitan statistical areas (MSAs), the report shows that Houston, Texas had the highest vacancy rate at 7.6 percent in October followed closely by Sarasota-Bradenton-Venice, Florida with 7.4 percent, and Indianapolis, Indiana with 7.1 percent. Morningstar adds that Houston has historically had a higher vacancy rate relative to other MSAs the company tracks.
Rounding out the top five was Jacksonville, Florida at 6.7 percent and Fort Lauderdale, Florida at 6.6 percent. Morningstar adds, “MSAs in Florida are showing higher levels of vacancy, some of which can be explained by lease expirations.”
Additionally, for the month of September (the latest month for which data is available), Morningstar reports that the rent change for vacant-to-occupied properties was 3.1 percent. This is compared to the rent change for renewal properties which was 4.4 percent.
“Higher rental increases for renewed properties than for vacant-to-occupied properties matches the relationship that these measures experienced one year ago,” says the report, “and renewal rent changes may continue to outpace vacant-to-occupied rent changes until the beginning of 2017.”