Single-family rent growth increased 3% year over year from October 2017 to October 2018. In fact, according to the CoreLogic Single-Family Rental Index, its growth has ticked up and above 3% since starting in June 2018.
Low-end single-family rentals (rentals that are 75% or less than a specific region’s median rental price) increased +3.9% year over hear in 2018. High-end single-family rentals (rentals that are 125% or more than a specific region’s median rental price) increased 2.6% year over year.
One thing to pay attention to when comparing low-end and high-end single-family rent growth is the direction of that growth. Low –end single-family rentals are decelerating at -0.3% lower than October 2017. High-end single-family rentals are accelerating at +0.6% higher than October 2017.
Just as housing sales markets vary significantly across metro areas, single-family rent markets vary. Cities with the highest y/y single-family rent growth in October 2018 were…
- Las Vegas – +6.6%
- Phoenix – +6.4%
- Orlando – +5.3%
- Austin – +5.2%
Note that single-family rent growth is highly tied to job growth. Las Vegas, in addition to having the highest single-family rent growth at +6.6% for October 2018 also had the strongest year over year employment growth at +4.4% in job gains.
Seattle, on the other hand, had the lowest y/y single-family rent growth at only +0.3%, a full 3.5% deceleration in rent growth in one year.
Nationally, employment growth was 1.7% in job gains. This complements the national single-family rent growth, again, at 3%.
Additionally, the single-family rental market is consolidating. This space within the housing industry has transformed dramatically over the last 10 years when Invitation Homes and AmericanHome4Rent dominated the market by acquiring thousands of homes and forming publicly traded companies to rent them out.
Enter outfits like Roofstock that works with institutional investors or portfolios worth +$20M, Investimate that connects retail investors with single-family properties and Rental Warehouse with its acquisition of OwnAmerica that gives single-family rental investors end-to-end services.
The single-family rental niche, for as much noise that it makes, is still a relatively small portion of the housing industry. Of the estimated 16M single-family rental homes in the US, only 250,000 of these homes are owned by institutional companies, Half of all single-family rental landlords own only one rental property,
That being said, most niche experts believe that consolidation will only increase as more investors, be they mom and pop or institutional, become involved with single-family rental ownership and/or property management.