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 among 20 metropolitan areas. Data collected for November 2018 shows a national rent increase of 2.9 percent, compared to 2.8 percent in November 2017.
Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2018. However, year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2 percent, and have stabilized over the last year with a monthly average of 2.9 percent.
National rent growth continued to be propped up by low-end rentals in November 2018. Rent prices among this tier, defined as properties with rent prices less than 75 percent of the regional median, increased 3.8 percent year over year in November 2018, down slightly from the 3.9 percent increase experienced in November 2017. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125 percent of a region’s median rent, increased 2.6 percent in November 2018, up from 2.3 percent in November 2017.
Among the 20 metro areas shown in Table 1, Las Vegas had the highest year-over-year increase in single-family rents in November 2018 at 6.7 percent (compared with November 2017), followed closely by Phoenix at 6.1 percent. Orlando experienced the third highest year-over-year rent increase at 5.3 percent. Seattle was the only metro to experience decreasing rent prices in November 2018 with a 0.7 percent year-over-year decline. This is the first time since May 2010 that rent prices in Seattle have stopped increasing, signaling a potential market stabilization.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Both Orlando and Phoenix experienced high year-over-year rent growth in November 2018, driven by employment growth of 4.8 percent and 4.2 percent year over year, respectively. This is compared with the national employment growth average of 1.6 percent, according to data from the United States Bureau of Labor Statistics.
Rent prices in disaster-affected areas like Houston have continued to increase throughout 2018. However, year-over-year growth in Houston stalled at 1 percent in November 2018, down from 2.4 the previous year. This is the lowest year-over-year rent price increase for Houston since October 2017, when the metro saw its first increase since April 2016.
“Unlike the CoreLogic Home Price Index, which has seen a slowdown in growth over the past year, U.S. rent growth has remained stable,” said Molly Boesel, principal economist at CoreLogic. “However, long-term rent increases have been lower than long-term home price increases. For example, rent prices increased 17 percent over the past five years, compared with a 32 percent increase in home prices over the same period. Additionally, lower-priced rentals and homes increase 1 ½ to 2 times faster than higher-priced rentals and homes. These lopsided gains between price tiers are common.”
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 70 Core Based Statistical Areas (CBSAs)—including 40 CBSAs with four value tiers—and a national composite index.
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