- Rent price increase in lower-priced rentals far exceed other price levels
- Phoenix had the highest year-over-year rent price increase in July, despite slow growth compared to first quarter of 2020
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 more than 80 metropolitan areas. Data collected for July 2020 shows a national rent increase of 1.7% year over year, down from a 2.9% year-over-year increase in July 2019.
In February, the coronavirus (COVID-19) pandemic set off a chain reaction in the rental market. Unemployment rates skyrocketed, leaving cash-strapped renters struggling to make ends meet and landlords lowering rates in the hopes of keeping their tenants, and local economies, afloat. Rent increases slowed sharply from an average of 2.9% in the first quarter of 2020 to 1.7% in May and 1.4% in June. However, in July, the national rent price growth rate stabilized for the first time since February, posting a 1.7% gain as local economies continued to reopen. Still, despite the positive signal on the national level, renters and landlords continued to work to accommodate shelter-in-place orders and added safety measures, which likely slowed rent price growth.
“Increases in single-family rent prices slowed dramatically this spring as the nation began to face the economic impact of the pandemic. As job losses slowed in July, rent growth steadied,” said Molly Boesel, principal economist at CoreLogic. “However, increases in rents should remain sluggish until the economy starts to experience employment gains.”
To gain an accurate view of single-family rental prices, CoreLogic examines four tiers of rental prices. On an annual basis, rent prices slowed across all tiers in July. However, mirroring the national trend, all tiers showed a slight uptick in rent growth month over month, with the high-end price tier experiencing the largest increase. In July 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): 2.6%, down from 3.7% in July 2019
- Lower-middle priced (75% to 100% of the regional median): 1.8%, down from 3.1% in July 2019
- Higher-middle priced (100% to 125% of the regional median): 1.7%, down from 2.8% in July 2019
- Higher-priced (125% or more than the regional median): 1.4%, down from 2.5% in July 2019
Among the 20 metro areas shown in Table 1, and for the 20th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in July 2020 at 4.7%. 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, had the second-highest rent price growth in July 2020 with a gain of 4.1%, followed by Charlotte, North Carolina, at 3.4%. Conversely, typical tourist destinations like Honolulu, Los Angeles, Miami and Boston all logged an annual decline in rent prices. Honolulu — which continues to adhere to stricter lockdowns and shelter-in-place ordinances — had the most significant decline at -1.3%.
While July’s unemployment rates remained elevated across the country, some areas are continuing to experience higher rates of job loss, which is driving downward pressure on rent prices. For example, employment decreased by just 3.5% in Phoenix where rent prices have remained comparatively strong. Meanwhile, Honolulu’s employment decreased by 13.8% compared to a year ago, which likely contributed to its significant rent price decline. Given the slow economic recovery from the initial impact of COVID-19, as well as the resurgence of the virus in many metro areas, we may expect to see further disruption of local rental markets.
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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