Rents for single-family homes rose 7.5% in June, the biggest increase since 2005
(TheRealDeal) – Investors investing big bucks in the single-family rental industry have just received some good news.
Rents for single-family homes rose 7.5% year-on-year in the United States in June, the largest such increase since at least 2005 and up sharply from the 1.4% increase in June 2020, according to CoreLogic, a housing data provider. .
The single-family home rental market has seen an increase in activity since the start of the pandemic, with the burning housing market driving prices to record highs and turning potential buyers into tenants. In response, private equity and alternative asset managers such as Blackstone, Brookfield Asset Management and KKR have invested billions in the space.
“Ultimately, for potential buyers who have either been out of the market or unable to find a home in the current market, where supply is limited, individual rentals are extremely preferred – and remain in high demand,” he said. Molly Boesel, senior economist at CoreLogic said in a statement.
Phoenix recorded the largest year-over-year increase in single-family home rents, at 16.5%. Las Vegas, which has been hit hard by the pandemic, has seen a strong recovery, posting the second-highest rental growth with a year-over-year gain of 12.9%.
Rental prices in Miami rose to third at 12.4% for a median monthly rent of $ 2,131. Meanwhile, New York City prices rose 6.7% to $ 2,743, while Los Angeles prices rose 5.4% to $ 3,048. Among the large cities, only Chicago and Boston saw their rents drop. Chicago fell 1% to $ 1,964 and Boston fell 2.7% to $ 2,775.
CoreLogic also looked at different price points for single family homes. Rent growth increased the most for the more expensive homes – where rents are 125% or more than the regional median – to 9.6% year-on-year, from 1.2% in June 2020.
As the single-family rental industry has seen an influx of investment, skeptics wonder if the business model is scalable. Finding homes available for purchase is difficult in today’s housing market, and the possibility of an increase in interest rates could reduce profit margins for rental operators. Housing advocates also argue that institutional landlords are responsible for the higher eviction rates.
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