Returns on single-family rental homes slightly decreased in 75% of US counties during Q1 2022, according to ATTOM.
Profit Margins Dropping on 3-Bedroom Single-Family Home Rentals
According to ATTOM’s latest Single-Family Rental Market report, profit margins on 3-bedroom single-family home rentals fell annually in 2022 across most markets in the US.
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ATTOM’s report indicates that average gross rental yields before expenses on 3-bedroom single-family homes fell in 72% of the counties analyzed for this latest Single-Family Rental Market report. (Yields are based on annualized 2022 gross rent income divided by median purchase prices during Q1 2022.)
Yields declined by less than -1% in 75% of markets where median home prices exceeded $250,000. Gross returns are declining in approximately 66% of markets (primarily in the Midwest and South) where homes generally sell for less than $250,000.
Why? Landlords had to pay at least +15% y/y more for three-bedroom homes in half of the counties ATTOM analyzed while average rents increased +15% in only 33% of those markets.
Rich Sharga, executive vice president of market intelligence with ATTOM, said, “Investors who own single family rental properties have seen their margins compressed over the last year as home prices have risen faster than rental rates.”
Counties with Top Rental Returns in Q1 2022
Single-family rentals were up at least +7% in 46% counties during Q1 2022.
Counties with the top single-family rental returns in Q1 2022 included:
- Collier County FL (Naples) – yield of 16%
- Atlantic County NJ (Atlantic City) – 12.2%
- Mercer County NJ (Trenton) – 11.6%
- Indian River County FL (Vero Beach) – 11%
- Charlotte County FL (outside Fort Myers – 10.7%
Counties with Smallest 2022 Returns on Three-Bedroom Single-Family Rentals
- Santa Clara County CA (San Jose) – 3.1%
- San Mateo County CA (outside San Francisco) – 3.2%
- Williamson County TN (outside Nashville) – 3.9%
- San Francisco County CA – 3.9%
- Fayette County KY (Lexington) – 3.9%
Clearly, the largest single-family rental returns during Q1 2022 occurred in the lowest-priced counties while the smallest single-family rental returns occurred in the country’s most expensive markets.
Rents & Home Prices Increasing Faster than Wages
ATTOM’s latest Single-Family Rental Report indicated that average three-bedroom rents rose faster than wages in 73% or 155 of the 212 counties analyzed.
Median single-family, three-bedroom home prices increased faster than average wages in 92% or 195 of the 212 counties analyzed by ATTOM.
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Thanks to ATTOM.
