CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. December 2020 data shows a national rent increase of 3.8% year over year, up from a 2.9% year-over-year increase in December 2019. Annual rent growth slowed in the early months of the pandemic but then steadily picked up in the latter half of the year, reaching pre-pandemic growth rates by October.
2020 was a noteworthy year for the single-family rental market. Renters sought more space and detached properties to weather the pandemic, which kept rent prices of single-family properties on the rise and multifamily rents tumbling. While single-family rents increased on average, some areas of the country experienced lower growth and even drops in rents.
“In the final months of 2020, single-family rents posted the highest increases in over four years,” said Molly Boesel, principal economist at CoreLogic. “However, single-family rent price reaction to the pandemic and resulting recession differed greatly across metros. While rents in the Southwest U.S. strengthened, in some areas of the country — in particular, areas relying heavily on tourism — rents softened.”
To gain an accurate view of single-family rental prices, CoreLogic examines four tiers of rental prices. In 2020, all four price tiers had a slowdown in rent growth as a result of the pandemic-induced economic recession, with the three higher price tiers returning to pre-pandemic growth rates within six months. In December 2020, rent increases in the lowest tier still lagged behind its year-before rates. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
Among the 20 metro areas shown in Table 1, and for 25 consecutive months, Phoenix had the highest year-over-year increase in single-family rents in December 2020 at 10.7%. Tucson, Arizona, had the second-highest rent price growth with a gain of 9.5%, followed by Charlotte, North Carolina, at 7.1%. Conversely, Boston posted an annual decline in rent prices of 7.2% and has experienced the largest decrease in all analyzed metros’ rent prices for five consecutive months. This is largely due to the city not experiencing its typical influx of college students in the fall.
Unemployment rates, while falling after the initial April jump, improved at various rates across the country in December and created a disparate impact in rent price growth. For example, unemployment in Austin, Texas, decreased to 5.3% in December 2020 while Honolulu’s unemployment decreased to 8.4%. And while year-over-year single-family rent in Austin grew by 4.7% in December, it decreased by 0.1% in Honolulu.
As states begin managing the administration of vaccines as well as mitigating continued unemployment concerns, rent prices will likely continue to experience mixed growth rates in metros across the nation.
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.
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