from CoreLogic
The Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas shows a national rent increase of 3% year over year, unchanged from March 2019. After three consecutive months of acceleration, March marked the first downshift in annual rent price growth. Rising unemployment and shelter-in-place directives left fewer people pursuing new residences.
Rental applications fell by 44% in the second half of March as the economy entered a recession and effects of the coronavirus (COVID-19) took hold. The impact of the pandemic, and the resulting economic crisis, are still unfolding each day and will continue to ripple through the rental market in the coming months.
“Single-family rent increases eased in March, dipping to a 3% annual gain. However, COVID-19 has had varied effects across price tiers,” said Molly Boesel, principal economist at CoreLogic. “Lower-priced rentals experienced a slight uptick in March as renters pursued more affordable rental options. Employment gains turned negative in four of the 20 metropolitan areas analyzed in the CoreLogic SFRI, a trend we can soon expect to see across the nation, which should have an impact on single-family rent prices.”
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Despite the slowdown in demand, lower-priced rentals propped up national rent price growth in March 2020. Rent prices among the low-end tier, defined as properties with rent prices less than 75% of the regional median, increased 3.9% year over year in March 2020, up from a gain of 3.7% in March 2019. Meanwhile, higher-priced rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.7% in March 2020, unchanged from March 2019.
Among the 20 metro areas shown in Table 1, and for the 16th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in March 2020 at 6.8% (compared to March 2019). Seattle experienced the second-highest rent price growth in March 2020 with gains of 6.2%, followed by Tucson, Arizona at 5.3%. Honolulu experienced the smallest increase of any of the analyzed metros at 0.7%.
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Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. The Phoenix job market has remained strong throughout the early weeks of the pandemic, experiencing an annual employment growth of 2.7%, compared with the national employment growth average of 0.8%, which allowed rent price growth to remain at the top of the nation in March 2020. Conversely, Honolulu saw a 0.5% decrease in employment year over year in March, contributing to its low rent growth.
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 over 80 metropolitan areas —including 45 metros with four value tiers—and a national composite index.
About the CoreLogic Consumer Housing Sentiment Study
In the second quarter of 2019, 877 renters and homeowners were surveyed by CoreLogic together with RTi Research. This study is a quarterly pulse of U.S. housing market dynamics. Each quarter, the research focuses on a different issue related to current housing topics. This first quarterly study concentrated on consumer sentiment within high-priced markets. The survey has a sampling error of +/- 3.1% at the total respondent level with a 95% confidence level.
About RTi Research
RTi Research is an innovative, global market research and brand strategy consultancy headquartered in Norwalk, CT. Founded in 1979, RTi has been consistently recognized by the American Marketing Association as one of the top 50 U.S. insights companies. The company serves a broad base of leading firms in Financial Services, Consumer Goods, and Pharmaceuticals as well as partnering with leading academic centers of excellence.
Source: CoreLogic
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About CoreLogic
CoreLogic (NYSE: CLGX), the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services and technologies, CoreLogic enable real estate professionals, financial institutions, insurance carriers, government agencies, and other housing market participants to help millions of people find, acquire and protect their homes. For more information, please visit www.corelogic.com.
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