As entry-level home supply remains low and prices continue to ride, demand for single-family homes has soared in the rental market – pushing rent prices higher, particularly on the lower end.
According to CoreLogic, prices for low-end single-family rental homes, those available for less than 75% of the median regional rent, rose 4% annually in September, compared to 2.9% growth on the high end. Vacancy rates for single-family rental homes have risen 0.3% across the nation. Phoenix has experienced the biggest drop in vacancy rates, down to 2.6%, which has pushed annual rent growth up to 6.7%.
The total number of single-family rental homes jumped 38% from 2010 to 2016, compared with just a 3% rise in multifamily units, according to Capital Economics. The supply of single-family rentals overall has now flattened, but demand is still very strong.
“One implication of fewer affordable homes to buy or rent is that household formation is likely to slow,” wrote Matthew Pointon, property economist at Capital Economics. “It also suggests rental growth for lower-priced homes will outperform the rest of the market.”
