Although 2017’s rental rates were higher, overall, than those in 2016, they have been decelerating. This could indicate the time to shift your investing strategy in terms of process or market.
According to the CoreLogic Single-Family Rent Index (SFRI), 2017’s rents were higher than those of 2016. This continues a seven-year trend of rising rents that started in 2010, although analysts noted that the price growth rate has decelerated gradually since it peaked at 4.3 percent in February 2016. The index is intended not just to chart changes in rental rates, but also to track rate growth over time.
CoreLogic analysts noted that only two of the 20 markets analyzed to attain the index reading, only Honolulu and Miami actually experienced a decrease in single-family rents as of November 2017. Nationally, single-family rent prices rose steadily, as they have since 2010, and had increased 2.7 percent year-over-year in November of last year (the most recent, comprehensive reading for the index). Unlike many rental measures, the SFRI measures changes in rents for single-family rental (SFR) homes as well as condominiums and uses a total of 75 statistical areas for data, although only 20 markets receive a close analysis in light of the results.
“The index’s overall growth…was pulled down by the high-end rental market, which is defined as properties with rent prices 125 percent or more of a region’s median rent,” observed Shu Chen, a data scientist with CoreLogic. Rent prices in this higher tier of properties rose 2.3 percent in November 2017 (vs. 1.7 percent in November 2016), while prices in the lower tiers of the market rose 3.8 percent in November 2017 (vs. 5 percent in 2016). Chen also noted the Houston, Texas rental rates are “showing strength,” likely due to increased demand for rental housing in the wake of Hurricane Harvey. Interestingly, despite Hurricane Irma, Florida’s rental markets are showing weakening rent growth at this time although, with the exception of Miami, the SFRI did indicate that Florida market rents were still higher in 2017 than in 2016.
Investor Insight:
Although 2017’s rental rates were higher, overall, than those in 2016, they have been decelerating. This could indicate the time to shift your investing strategy in terms of process or market.
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