The rental market is ripe for single-family rental investors, even on the secondary side, with the top markets on the list showing rents increasing by above 10% in the first quarter.
RentRange, a provider of market data and analytics for the single-family rental industry, ranked the top 25 U.S. Metropolitan Statistical Areas by average rental rate increase for single-family homes between first quarter 2016 and the same quarter in 2015.
“The single-family rental market across the U.S. continues to offer significant opportunity for investors,” said Wally Charnoff at RentRange.
“The robust data available today empowers even non-institutional investors to analyze geographies and select the investment locations throughout the U.S. that are most opportune, as opposed to being limited to their own backyard,” said Charnoff.
And it’s not the usual order of names in the top 25, as three new markets take spots in the top 10 compared to last quarter: Naples-Marco Island, Florida, Syracuse, New York and Milwaukee-Waukesha-West Allis, Wisconsin.
Here is a chart of the 25 markets with the biggest rent hikes:
Click to enlarge
HousingWire’s latest May issue covered today’s rental surge and why more people are opting out of homeownership.
Did the Great Recession launched a new era of renting versus buying that will eventually result in a nation where more people rent their homes than purchase them?
At the height of the housing bubble, 69% of American households owned their homes. As of 2015, that number had fallen to 63.7%.
Now it's rising, as are rents. But where the renters suffer, the investors are winning, in more ways than one.
True, in the latest surveillance report from Kroll Bond Rating Agency, these properties continue to produce strong returns.
And this is why:
"Contractual rental rates have continued to increase, vacancy rates declined (but remain above issuance levels), tenant retention rates have remained relatively stable, and delinquency rates have remained low," the report states.
But what's more, the securitized assets themselves are appreciating as well.
"The 90,649 properties underlying the subject transactions have, on average, appreciated in value by 10.2% since the issuance dates of the respective transactions, as inferred by changes in CoreLogic’s zip code-level Home Price Index." the report concludes.