Spotlight on Single-Borrower Performance

The latest single-family rental research from Morningstar Credit Ratings, LLC shows that the rent change for single-borrower and single-family rental securitizations increased by 2.3 percent in December, dropping from a revised 3.6 percent in November. Data indicated that the average vacancy rate increased by 10 basis points to 4.6 percent in December from a revised 4.5 percent in November. The average retention rate for expiring leases recorded a drop by 110 basis points to 77.7 percent in November from a revised 78.8 percent in October, according to the report. The report noted that it has remained over 75 percent for the past year.

Of the 20 metropolitan statistical areas (MSA), Houston MSA had the highest vacancy rate at 6.5 percent, down from a revised 6.8 percent in November. This was followed by Denver-Aurora at 6.8 percent, and Indianapolis at 5.8 percent each. The highest blended rent growth was experienced in Las Vegas at 4.1 percent, followed by Raleigh-Cary, North Carolina at 3.4 percent and Memphis, Tennessee at 3.2 percent.  

Lowest rent growth was recorded at 0.6 percent in the Chicago followed by Indianapolis and Houston MSA at 0.7 percent and 1.4 percent respectively. According to Morningstar research,

With the exception of the Fort Lauderdale, Houston, and Phoenix MSAs, rents for properties included in single-family rental securitizations continue to exceed the RentRange rents for three- and four-bedroom properties located in the same MSAs.

Analyzing single-borrower performance, the research found a decrease in lease expirations to 4.8 percent in December, a drop from 5.3 percent in November. This decline is also expected to lead to a decline in the vacancy rate in the coming months. The average retention rate on full-term leases declined 110 basis points to 77.7 percent in November, the latest month for which data is available, from a revised 78.8 percent in October.

The overall turnover rate declined to 2.5 percent in November, the latest month for which data is available, from 3 percent in October. The average delinquency rate increased to 0.9 percent in December, with two transactions reporting delinquency rates of 2 percent each. Rents recorded an upward spike at 3.6 percent in November, compared with a revised 3.8 percent increase in October, according to the research.

Rents recorded an upward spike at 2.3 percent in December, compared with a revised 3.6 percent increase in November, according to the research.

Focusing on how to build, manage and grow investment opportunities, 2019 will see an array of housing and mortgage professionals come together at The Guest House of Graceland, Memphis, Tennessee between March 11-13 for the Single Family Rental Summit. The Summit will feature subject-matter experts who will answer questions and offer viable solutions related to property management, acquisition, disposition, and financing. Click here to register for the summit.