Earlier this year — in the months leading up to the coronavirus (COVID-19) pandemic — rent price growth was stable at an annual average of 3%. However, growth slowed drastically in May and continued to decline in June, falling to its lowest growth rate since May 2010. But, much like the virus itself, the impact to local rental markets has varied widely as regions grapple with unemployment and manage localized economic stressors.
“National rent growth reached its slowest pace in 10 years in June, indicating that, despite the reopening of many local economies, the impacts of the pandemic are continuing to weigh on the rental market,” said Molly Boesel, principal economist at CoreLogic. “While rents slackened across the country, most metro areas maintained an increase in rents compared to this time last year. However, areas like Honolulu and Los Angeles, which continue to adhere to stricter lockdowns and shelter-in-place ordinances, experienced an annual decline in rent prices in June.”
To gain an accurate view of single-family rental prices, CoreLogic examines four tiers of rental prices. Prices slowed across all tiers in June, with the gap between the low-end and high-end tiers continuing to widen. In June 2020, the 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): 2.5%, down from 3.7% in June 2019
- Lower-middle priced (75% to 100% of the regional median): 1.5%, down from 3.1% in June 2019
- Higher-middle priced (100% to 125% of the regional median): 1.4%, down from 6% in June 2019
- Higher-priced (125% or more than the regional median): 1%, down from 2.5% in June 2019
Among the 20 metro areas shown in Table 1, and for the 19th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in June 2020 at 5%. However, rent growth in Phoenix has also begun to slow in comparison to its average growth rate of 6.5% in the first quarter of 2020. Tucson, Arizona, experienced the second-highest rent price growth in June 2020 with a gain of 2.9%, followed by Charlotte, North Carolina, at 2.6%. Honolulu, and Los Angeles — which was hit hard by the stalled film and television industry, were the only two metros to experience and annual decline in rent prices, dropping 1.2% and 0.7% respectively. In May, Honolulu reported the highest median rent price of $3,004 and Los Angeles reported a median rent of $2,800. The higher rental prices may have contributed to the decline seen in June as renters moved to more affordable areas.
While unemployment rates remained elevated across the country in June, some areas are continuing to experience higher rates of job loss — adversely impacting rental demand and slowing rent price growth. For example, Boston experienced a dramatic, 14% year-over-year decrease in employment in June. This pushed the metro’s rent price growth below the national average, with an increase of 0.9% compared to June 2019. Alternatively, Tucson reported a 2.8% decline in employment in June — the lowest of any metro analyzed — and is continuing to see strong rent growth. With the continued resurgence of COVID-19 cases across the country, we may expect to see further disruption of local rental markets.
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.
Source: CoreLogic
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