CoreLogic's new Single-Family Rental Index (SFRI) measures the changing rent dynamics of single-family rental properties, which have slowed over the past year and a half reports CoreLogic's Sam Khater. Single-family rent growth increased between 2010 and 2014, but has slowly declined since it peaked at a 4.6% year-over-year rate in December 2014. Rates were up 3.3% over 12 months in May, but still lagged 1.2% behind the peak.
Los Angeles had the highest rent growth at 5.4% compared to a year ago, closely followed by Atlanta (4.8%), San Diego (4.8%) and Dallas (4.8%). Single-family rents have decelerated in Miami and Houston, where he high end is impacted by oil and currency price swings.
While demand for single-family rental homes caused by the sharp increase in foreclosures has moderated, completed foreclosures remain at about twice the normal level so this incremental demand will keep pressure on lower end rents. Moreover, “tight” mortgage credit conditions and the run up in house prices in most markets has pushed home ownership out of the reach of many renters.
The bottom line is that single-family rental growth has surpassed its peak growth rate and is decelerating. The slowdown in rent growth is due to a divergence in low vs high rent growth and there are substantial regional variations of high end rent growth. The lack of supply and consistent demand will keep rent growth firm, particularly in the lower and middle segments for the foreseeable future.