Consumers continue to feel the push and pull between the purchase and rental markets. While desire for home ownership remains high — with 93% of consumers agreeing that owning a home is a sound financial investment according to a recent CoreLogic survey — the competitive purchase market conditions are creating a large wave of demand for single-family rentals that offer more financial flexibility. As the single-family rental market faces similar supply challenges as the for-sale market, we can expect a continued increase in rents, especially across high-end rentals as renters seek more space.
“Single-family rental vacancy rates remained near 25-year lows in the third quarter of 2021, pushing annual rent growth to double digits in September,” said Molly Boesel, principal economist at CoreLogic. “Rent growth should continue to be robust in the near term, especially as the labor market improves and the demand for larger homes continues.”
To gain a detailed view of single-family rental prices, CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
- Lower-priced (75% or less than the regional median): 8.3%, up from 2.4% in September 2020
- Lower-middle priced (75% to 100% of the regional median): 9.3%, up from 2.3% in September 2020
- Higher-middle priced (100% to 125% of the regional median): 10.5%, up from 2.4% inSeptember 2020
- Higher-priced (125% or more than the regional median): 11%, up from 2.8% in September 2020
Among the 20 metro areas shown in Table 1, Miami had the highest year-over-year increase in single-family rents in September 2021 at 25.7%, followed by Phoenix and Las Vegas at 19.8% and 15.9% respectively. These major metros have continued to experience rapid growth as tourism returns and local labor markets improve. While Boston logged the second lowest rent price gain, September marked the second consecutive month that the market has seen an increase in single-family rents after 14 months of declines.
The next CoreLogic Single-Family Rent Index will be released on December 21, 2021, featuring data for October 2021. For ongoing housing trends and data, visit the CoreLogic Intelligence Blog: www.corelogic.com/intelligence.
The single-family rental market accounts for half of the rental housing stock, yet unlike the multifamily market, which has many different sources of rent data, there are minimal quality adjusted single-family rent transaction data. The CoreLogic Single-Family Rent Index (SFRI) serves to fill that void by applying a repeat pairing methodology to single-family rental listing data in the Multiple Listing Service. CoreLogic constructed the SFRI for close to 100 metropolitan areas — including 47 metros with four value tiers — and a national composite index.