While existing home sales experienced a major month-over-month decline in November above what was expected due to seasonality, the single-family rental market was alive and well during the month with higher-trending retention rates and generally stable or lower delinquency and vacancy rates, according to data reported by Morningstar Credit Ratings in its December 2015 Single-Family Research: Performance Summary Covering All Morningstar Rated Securitizations.
The report, which covers 22 SFR securitizations as of November, the latest month for which the data is available, found that retention rates in those securitizations are trending higher at 70 percent while turnover rates have stabilized or are generally declining, according to Morningstar.
It has been slightly more than two years since Invitation Homes issued the first SFR securitization in October 2013. The SFR market has gained steam in the last year as the supply of single-family homes for sale has lagged.
“The Morningstar SFR Performance Summary reports on a number of performance metrics and these metrics can vary over time,” the authors of the report, Associate VP of RMBS Brian Sandler and VP of RMBS Brian Alan wrote. “Overall performance in the SFR space is in line with Morningstar’s expectations.”
Two notable exceptions to the declining turnover rates are two American Homes 4 Rent transactions, AH4R 2015-SFR2 and AH4R 2014-SFR1. The turnover rates for those two transactions increased to 6.1 percent and 5.0 percent, respectively, in November. These two AH4R securitizations had the two highest turnover rates for November out of the 22 transactions covered in the report.
Vacancy rates, which are heavily influenced by the number of leases expiring in a given month, were trending lower in November. But again an AH4R transaction was an exception—this time AH4R SFR1, which saw its vacancy rate jump from 8.3 percent in October to 9.0 percent in November. This securitization has had more than 58 percent of leases expire in the previous five months, however. November marked the fifth consecutive month of increase in vacancy rate for PRD 2015-SFR2 (Progress Residential), which now has a vacancy rate of 7.3 percent. In contrast, PRD 2015-SFR1 has seen three straight months of decline in vacancy rate, which is at 6.5 percent as of the end of November. The seven Invitation Homes transactions in the report continued to trend low in November; the highest rate among the seven was 5.9 percent.
Click here to view the entire December 2015 Single-Family Research: Performance Summary by Morningstar Credit Ratings.