Demand in the single-family rental market has been increasingly on the rise. As housing prices continue to climb and inventory is unable to keep up with the growing demand, potential buyers are shifting their focus more towards renting.
John Burns Research & Consulting recently released their Single-Family Rental Survey reporting on the current metrics surrounding the SFR market. They surveyed over 234K owners of professionally managed SFR homes across 52 markets in the first half of August. According to the report, the SFR market has stabilized in recent quarters from the cooling-off period the country experienced following the pandemic boom. They are seeing a national blended SFR rent growth holding steady at 6.5% from Q1 to Q2 of this year, and new lease growth has increased from 7% to 8% nationally from Q1 to Q2. Additionally, operating expenses have grown nationally, causing an offset in rent gains.
We outline our top three takeaways from the report for real estate investors interested in the current state of the single-family rental market.
1. Blended SFR Rents Are the Fastest Growing Asset Class
The survey reports that national blended SFR rent growth (7% YOY) exceeds apartment rent growth (2% YOY) and new and resale home price appreciation (1%-2% YOY). Overall, blended SFR rents were reported to be growing faster than other asset classes like new home and apartment markets or the resale market.
Sources: Reis Services, LLC; Census Bureau; Moody’s Analytics; Burns Home Value Index™ (BHVI); Atlanta Federal Reserve Board Wage Growth Tracker; Blended single-family rent growth as published in the Burns Single-Family Rental Market Index.
2. Average Rent Prices Nationally Reached $2,054 in Q2
The report states that approximately half of respondents reported average rents of $1,750 – $2,250, resulting in a national average rent of $2,054 in Q2. Northern California had the highest weighted average monthly rent at $2,900, with the Midwest averaging the lowest at $1,700. Northern Florida rents averaged $2,100, a higher average rent than the Southeast region’s $1,750.
Source: John Burns Research and Consulting, LLC (Data: 2Q23, Pub: Aug-23)
3. Occupancy is at an All-Time High (97% Average)
According to the survey, operators reported a 97% average occupancy rate nationally, with 13% of operators seeing 99%-100% occupancy across their portfolios. Overall, occupancy rates were up significantly from Q2 (95%) to Q1 (72%). Northern California held the highest occupancy rate at 99% with Southern California, Southern Florida, and the Northwest following at 98%.
Source: John Burns Research and Consulting, LLC (Data: 2Q23, Pub: Aug-23)
This growing single-family rental market offers real estate investors lucrative chances to scale their portfolios and increase revenue. LendingOne offers a variety of rental loan products that can provide the necessary financing options investors need. Click here to learn more.