Even as the pandemic ebbs and Americans get back to work and play, they still want more space at home. But with home prices hitting record highs, demand for single-family rental homes is soaring – and so are the rents.
Single-family rents were up 5.3% year over year in April, up from a 2.4% year-over-year increase in April 2020, according to CoreLogic. That is the largest gain in nearly 15 years.
Rents for single-family detached homes (not townhomes), were up an even stronger 7.9% compared with a year ago, as millennials in particular seek more outdoor space. Nearly half of millennials surveyed by Corelogic, and 64% of Baby Boomers, said they, “strongly prefer” to live in a single, stand-alone home.
“Single-family rent growth showed a strong rebound in April 2021 with all price tiers back above their pre-pandemic rent growth rate,” said Molly Boesel, principal economist at CoreLogic. “While rent growth slowed last April at the start of the pandemic, the rate of rent growth this April was running above pre-pandemic levels even when compared with 2019 and shows no signs of diminishing.”
The rent gains are across all price categories, even low-end, which exceeded pre-pandemic rent gains for the first time. By category, the gains are as follows:
· Lower-priced (75% or less than the regional median): 3.9%, up from 3.2% in April 2020
· Lower-middle priced (75% to 100% of the regional median): 4.8%, up from 2.5% in April 2020
· Higher-middle priced (100% to 125% of the regional median): 5.1%, up from 2.3% in April 2020
· Higher-priced (125% or more than the regional median): 6.1%, up from 2.2% in April 2020
Regionally, by top 20 metropolitan markets, rent gains were highest in Phoenix, where single-family rents were 12.2% higher than a year ago. Next, Tucson, Arizona, with a gain of 10.6%. That was followed by Las Vegas at 9.3%. Atlanta, which had the lowest unemployment rate of the to 20 metros, came in fourth at 9.1%.
On the flip side, Boston saw an annual decline of 5.9% in rent prices and has experienced the largest decrease of the 20 metropolitan market rent prices for nine straight months. Chicago was the only other decliner, at 2.6%.
With home prices continuing to gain at a double-digit pace, and more potential buyers being priced out, demand for single-family rentals is unlikely to cool anytime soon.
“The inflation that is currently here is slowing the most interest rate sensitive part of the economy, that being housing,” said Peter Boockvar, chief investment officer at the Bleakley Advisory Group.