Hot housing market conditions have exacerbated the challenges of finding affordable rental properties for some consumers. According to a recent CoreLogic survey, 85% of consumers searching for a home said they prefer single-family homes. However, for-sale inventory remains in short supply as construction continues to lag. Not only is this keeping many would-be buyers on the hunt for single-family rentals, but it’s also contributing to the dwindling availability and increasing prices of these properties. As space and affordability remain top priorities for renters, we can expect to see a similar trend as the for-sale market — increased migration to less dense and lower cost areas.
“Single-family rent growth accelerated in June, bouncing back from last year’s weak growth,” said Molly Boesel, principal economist at CoreLogic. “The recovery was even more pronounced for detached rentals, which had rent growth more than double that of attached rentals. Ultimately, for would-be homebuyers who have been either priced out of the market or unable to find a home in today’s supply-constrained market, detached rentals are overwhelmingly preferred — and remain in high demand.”
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): 5.3%, up from 2.3% in June 2020
- Lower-middle priced (75% to 100% of the regional median): 6.4%, up from 1.5% in June 2020
- Higher-middle priced (100% to 125% of the regional median): 7.1%, up from 1.5% in June 2020
- Higher-priced (125% or more than the regional median): 9.6%, up from 1.2% in June 2020
Among the 20 metro areas shown in Table 1, Phoenix had the highest year-over-year increase in single-family rents in June 2021 at 16.5%. Some tourist destinations that were hard-hit by the pandemic are also showing strong signs of recovery, with Las Vegas logging the second-highest rent price growth with a gain of 12.9%. And while Boston has experienced the largest decrease in 20 metros’ rent prices for 11 consecutive months now (with an annual decline of 2.7% in June) the area’s rate of decline is slowing compared to previous months.
Methodology
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 over 80 metropolitan areas — including 45 metros with four value tiers — and a national composite index.
The CoreLogic Single-Family Rent Index analyzes data across four price tiers: Lower-priced, which represent rentals with prices 75% or below the regional median; lower-middle, 75% to 100% of the regional median; higher-middle, 100%-125% of the regional median; and higher-priced, 125% or more above the regional median.
Median rent price data is produced monthly by CoreLogic RentalTrends. RentalTrends is built on a database of more than 11 million rental properties (over 75% of all U.S. individual owned rental properties) and covers all 50 states and 17,500 ZIP codes.
