SFR Median Rent Growth Risen by at Least 3% in Many Markets This Year, Continues to Show Momentum
The increasing demand for single family rentals is helping push rent prices higher in most markets. Despite the turmoil in the stock market, the US economy is performing relatively well so far in 2019, helping keep rental homes occupied.
Not only are rents growing, but occupancy seems to be up across the board too. Properties operated by Invitation Homes were 96.5 percent occupied in the second quarter, slightly higher than the year before, according to Tanner. The rents are also rising. Same-property rents grew by 5.3 percent compared to the second quarter of 2018—a rate of growth 60 basis points higher than last year.
“Rental units continue to have strong occupancy levels,” says Gary Beasley, CEO and co-founder of Roofstock, an investment company focused on the SFR sector. “Across top single-family rental markets, the average occupancy rate reported by the public single-family rental REITs is above 95 percent."
Rents are increasing the most in markets where the cost of the rental was close to, or slightly above the national average.
What’s concerning is how rental prices, especially in our area, have vastly outpaced wage growth. The median rent increases are around 3-4% making the median rent for a SFR in the Portland metro area almost $2,100. The housing shortage Portland faces along with rising demand for what is available means landlords can push for higher rents, and get them. We are committed to developing affordable homes for our communities and have recently started development on a large 332 lot project in pleasant valley we expect to complete by 2020, bringing as many as 500 new homes to the area.
The majority of SFR homes are still owned by individuals, Institutional investors (entities buying at least 10 properties in a calendar year) bought just 2.2 percent of the houses and condos sold in the second quarter of 2019, down from 2.4 percent a year ago. This is also a small fraction of the market share they had in the peak years of 2012-2013 where they accounted for more than 7.0 percent of all home purchases.
Innovation homes spent $211 million to buy new rental homes in the second quarter of 2019, just slightly more than the $205 million they sold, a spokesperson commented this was part of it's capital recycling plan to further enhance the quality of it's portfolio.