CoreLogic released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. Single-family rent prices experienced extensive growth during 2021, increasing an average of 7.8% compared to 2.6% in 2020. On a monthly basis, rent prices ended the year with a 12% annual increase in December 2021, up from 3.9% in December 2020.
For many prospective buyers, affordability challenges and limited supply created barriers to home purchasing. Consumer confidence fell in the second half of the year, partly due to rising inflation, pushing many Americans to hold off on large purchases like homebuying.
These factors have driven elevated demand for single-family rentals, and put increased pressure on the market as vacancy rates also hit historical lows. While slowing home price appreciation could gradually help balance demand for the rental market, rent prices will likely remain strong throughout the year.
“Single-family rent growth had a record-breaking year in 2021, bolstered by increasing employment and low vacancy rates,” said Molly Boesel, Principal Economist at CoreLogic. “However, as rents make up one-third of the Consumer Price Index, rapid rent growth helped push up inflation in 2021. While rent growth should ease in 2022, inflation may remain elevated for much of this year.”
CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were:
• Lower-priced (75% or less than the regional median): 11.2%, up from 3.2% in December 2020
• Lower-middle priced (75% to 100% of the regional median): 12.4%, up from 3.3% in December 2020
• Higher-middle priced (100% to 125% of the regional median): 12.5%, up from 3.9% in December 2020
• Higher-priced (125% or more than the regional median): 11.9%, up from 4.5% in December 2020
Among the 20 metro areas in the analysis, Miami had the highest year-over-year increase in single-family rents in December 2021 at 35.7%, a significant rebound from its December 2020 growth rate of 1.4%. Phoenix and Orlando came second and third, with their highest gains at 18.9% and 17.9%. These major metros have continued to experience rapid growth year-over-year and month-over-month, as the tourism industry begins to recover and job growth continues to improve. It was Washington that logged the lowest annual rent price growth at 5.3% in December.
CoreLogic also examines single-family rent growth by property type. Differences in rent growth by property type emerged after the pandemic as renters sought out standalone properties in lower density areas. This trend drove a rapid acceleration in rent growth for detached rentals in 2021, while growth for attached rentals slowed. However, as rental inventory has remained scarce, the gap between attached and detached rental growth started to close in the later months of the year, with gains of 11.3% and 12.1% in December 2021. This is the closest that attached and detached growth rates have been since April 2020.
The next CoreLogic Single-Family Rent Index will be released on March 15, 2022, featuring data for January 2022. For ongoing housing trends and data, visit the CoreLogic Intelligence Blog.
With recent rent price increases reaching near 15-year highs, and values projected to grow by more than 13% over the next year, the SFR market continues to flourish. The Five Star Institute will host SFRS 2022: The Single-Family Rental Summit on Thursday, April 7 at The Statler Dallas, located at 1914 Commerce Street in Dallas, Texas.
As investors begin flood the market again, it’s important to have your business ready to navigate the often-rocky roads that surround the SFR market. Join your peers in Dallas this April where top subject matter experts and skilled SFR practitioners will lead discussion panels and training sessions with the goal of answering questions and offering solutions related to property acquisition and management, financing, strategies for small, midcap, and large investors, and new developments related to technology and professional services.
Click here for more information on SFRS 2022.