The single-family rent growth rate more than doubled year over year during April, according to the latest figures from CoreLogic.
The company’s Single-Family Rent Index reported a national rent increase of 5.3% annually, up from a 2.4% annual increase in the same month last year and the largest annual rent price increase in almost 15 years.
The big jump is due to a couple of factors, both past and present. For one thing, rent growth decelerated substantially last April due to the beginning of the COVID-19 pandemic. For another, worsening affordability and persistent supply issues in the for-sale housing market, coupled with ongoing demographic pressure from aging millennials, have continued to place upward pressure on the single-family rental market.
“Single-family rent growth showed a strong rebound in April 2021 with all price tiers back above their pre-pandemic rent growth rate,” said Molly Boesel, principal economist at CoreLogic. “While rent growth slowed last April at the start of the pandemic, the rate of rent growth this April was running above pre-pandemic levels even when compared with 2019 and shows no signs of diminishing.”
Single-family rentals have become popular as renters seeking more space, distance from neighbors and outdoor amenities as the pandemic drags on. Consider a recent CoreLogic survey that revealed 49% or millennials and 64% of baby boomers strongly prefer living in a single, standalone home; subsequently, detached rentals have seen especially rapid rent growth, with rents jumping 7.9% year over year in April. Attached rentals, in comparison, saw 2.2% annual rent growth over the same month.
Such trends are enticing developers to increasingly wade into the build-to-rent market. More and more luxury single-family rentals are popping up, appealing both to baby boomers looking to downsize and millennials who want more space while retaining flexibility as their employers define post-pandemic remote work policies.
This is reflected in rent growth when broken down by price tier, as higher priced rentals (with rents at 125% or more of the regional median) seeing the fastest rent growth of all price ranges in April. Such properties saw rents grow 6,1% in April, compared to 5.1% for higher-middle priced rentals, 4.8% for lower-middle priced rentals and 3.9% for lower-priced rentals. This is a complete reversal from last April, when lower-priced rentals (at 3.2% annual growth) saw rents accelerate fastest, followed by lower-middle priced rentals (2.5%), higher-middle priced rentals (2.3%) and higher-priced properties (2.2%).
Of the 20 metros tracked by CoreLogic, Phoenix saw the highest year-over-year increase in single-family rents during April at 12.2%. Boston, on the other hand, logged an annual rent decline of 5.9%, posting the largest decrease among CoreLogic’s 20 tracked markets for nine straight months.