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Rents for single-family homes increased 10.2% nationally in September year over year, up from a 2.6% rise in September of last year, according to a new report from CoreLogic.
Improved job growth and sky-high prices in the for-sale housing market added to already strong demand for single-family rentals fueled by the coronavirus pandemic.
While 93% of consumers said they believe owning a home is a good investment, according to a separate CoreLogic report, competition in the buying market is forcing more potential buyers to remain renters.
The single-family market is particularly hot right now, as people want more space and as the huge millennial generation ages into marriage and parenthood.
“Single-family rental vacancy rates remained near 25-year lows in the third quarter of 2021, pushing annual rent growth to double digits in September,” said Molly Boesel, principal economist at CoreLogic. “Rent growth should continue to be robust in the near term, especially as the labor market improves and the demand for larger homes continues.”
Rent growth is strong in every price tier, but strongest at the very top:
- Lower-priced (75% or less than the regional median): 8.3%, up from 2.4% in September 2020
- Lower-middle priced (75% to 100% of the regional median): 9.3%, up from 2.3% in September 2020
- Higher-middle priced (100% to 125% of the regional median): 10.5%, up from 2.4% in September 2020
- Higher-priced (125% or more than the regional median): 11%, up from 2.8% in September 2020
Some markets are hotter than others. Rent growth was strongest in Miami, with a stunning 25.7% year-over-year gain. Miami also has one of the highest median rents in the country.
Miami was followed by Phoenix and Las Vegas at 19.8% and 15.9%, respectively. Those three markets are seeing more growth as tourism finally begins to return following pandemic restrictions. Austin, Texas, and San Diego rounded out the top five markets for rent growth.
On the bottom, Chicago, Boston, Philadelphia, Washington D.C., and the New York City metropolitan area are seeing the lowest rent growth of under 5% from a year ago.