Single-Family Rents Up 6.6% Year Over Year in May
by Calculated Risk on 7/21/2021 12:22:00 PM
Housing economist Tom Lawler has been tracking this, see: Lawler: Single-Family Rent Trends. This will likely push up Owner’s Equivalent Rent (OER, a key component of CPI) in the coming months.
From CoreLogic: U.S. Single-Family Rents Up 6.6% Year Over Year in May
U.S. single-family rent growth increased 6.6% in May 2021, the fastest year-over-year increase since at least January 2005, according to the CoreLogic Single-Family Rent Index (SFRI). The May 2021 increase was nearly four times the May 2020 increase. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.
An uneven U.S. job recovery, sometimes called a “K-shaped” recovery, is reflected in the rent price growth of the low- and high-price rent tiers, with the increase in lower-priced rentals lagging behind that of higher-priced rentals. The low-price tier is defined as properties with rent prices less than 75% of the regional median, and the high-price tier is defined as properties with rent prices greater than 125% of a region’s median rent (Figure 1).
Rent prices for the low-price tier, increased 4.6% year over year in May 2021, up from 2.7% in May 2020. Meanwhile, high-price rentals increased 7.9% in May 2021, up from a gain of 1.3% in May 2020. This was the fastest increase in low-price rents since January 2017, and the fastest increase in high-price rentals in the history of the SFRI.
Differences in rent growth by property type emerged after the pandemic as renters sought out standalone properties in lower density areas (Figure 2). The detached property type tier is defined as properties with a free-standing residential building, and the attached property type tier is defined as a single-family dwelling that is attached to other single-family dwellings, which includes duplexes, triplexes, quadplexes, townhouses, row-houses, condos and co-ops.
As demand for more space and outdoor amenities remains, detached rentals in particular are experiencing accelerated growth with a 9.2% year-over-year increase in May, compared to growth of 3.6% annually for attached rentals.