CoreLogic, a leading global property information, analytics and data-enabled solutions provider, released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas.
Single-family rent prices experienced extensive growth during 2021, increasing an average of 7.8% compared to 2.6% in 2020. On a monthly basis, rent prices ended the year with a 12% annual increase in December 2021, up from 3.9% in December 2020. Affordability challenges and limited supply created barriers to home purchasing for many prospective buyers. Meanwhile, consumer confidence fell in the latter half of the year, due in part to rising inflation, pushing many to hold on big-ticket purchases like homebuying. These factors have driven elevated demand for single-family rentals and put increased pressure on the market as vacancy rates also hit historical lows.
Looking ahead, while slowing home price appreciation could help gradually balance demand for the rental market, rent prices will likely remain strong throughout the year.
“Single-family rent growth had a record-breaking year in 2021, bolstered by increasing employment and low vacancy rates,” said Molly Boesel, principal economist at CoreLogic. “However, as rents make up one-third of the Consumer Price Index, rapid rent growth helped push up inflation in 2021. While rent growth should ease in 2022, inflation may remain elevated for much of this year.”
To gain a detailed view of single-family rental prices, CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
- Lower-priced (75% or less than the regional median): 11.2%, up from 3.2% in December 2020
- Lower-middle priced (75% to 100% of the regional median): 12.4%, up from 3.3% in December 2020
- Higher-middle priced (100% to 125% of the regional median): 12.5%, up from 3.9% in December 2020
- Higher-priced (125% or more than the regional median): 11.9%, up from 4.5% in December 2020
Among the 20 metro areas shown in Table 1, Miami had the highest year-over-year increase in single-family rents in December 2021 at 35.7%, a significant bounce back from its December 2020 growth rate of 1.4%. Phoenix and Orlando logged the second- and third-highest gains at 18.9% and 17.9%, respectively. These major metros have continued to experience rapid growth year over year and month over month as the tourism industry recovers and job growth continues to improve. Meanwhile, Washington logged the lowest annual rent price growth at 5.3% in December.
CoreLogic also examines single-family rent growth by property type as shown in Figure 3. Differences in rent growth by property type emerged after the pandemic as renters sought out standalone properties in lower density areas. This trend drove an acceleration in rent growth for detached rentals in 2021 while growth for attached rentals slowed. However, as rental inventory has remained slim, the gap between attached and detached rental growth started to close in the latter part of the year, with gains of 11.3% and 12.1% respectively in December 2021. This is the closest that attached and detached growth rates have been since April 2020.
The next CoreLogic Single-Family Rent Index will be released on March 15, 2022, featuring data for January 2022. For ongoing housing trends and data, visit the CoreLogic Intelligence Blog: www.corelogic.com/intelligence.
Methodology
The single-family rental market accounts for half of the rental housing stock, yet unlike the multifamily market, which has many different sources of rent data, there are minimal quality adjusted single-family rent transaction data. The CoreLogic Single-Family Rent Index (SFRI) serves to fill that void by applying a repeat pairing methodology to single-family rental listing data in the Multiple Listing Service. CoreLogic constructed the SFRI for close to 100 metropolitan areas — including 47 metros with four value tiers — and a national composite index.
The CoreLogic Single-Family Rent Index analyzes data across four price tiers: Lower-priced, which represent rentals with prices 75% or below the regional median; lower-middle, 75% to 100% of the regional median; higher-middle, 100%-125% of the regional median; and higher-priced, 125% or more above the regional median.
Median rent price data is produced monthly by CoreLogic RentalTrends. RentalTrends is built on a database of more than 11 million rental properties (over 75% of all U.S. individual owned rental properties) and covers all 50 states and 17,500 ZIP codes.