Single-family rents prices increased 3.1% year-over-year, an increase propped up largely by low-end rentals, defined as properties with rent prices less than 75% of the regional median, according to CoreLogic’s latest Single-Family Rent Index (SFRI). Low-end rentals were up 3.6% year-over-year in October 2019.
The increase in single-family rental prices were fueled by the low rental home inventory, but price growth has slowed since February 2016. High-end rental prices grew alongside low-end, up by 2.9% from October 2018.
“Increases in low-end rent prices have outpaced those on the high end for more than five years as newly-formed households push up demand for entry-level rentals,” said Molly Boesel, Principal Economist at CoreLogic. “However, high-end rents gained momentum for the sixth consecutive month in October 2019, while low-end rates slowed for the first time in roughly five months–resulting in the narrowest gap in rent growth for these price tiers since 2014.”
By region, Phoenix had the highest year-over-year increase in single-family rents in October 2019 at 6.8%. Following Phoenix, Seattle took the second-highest rent price growth in October 2019 with gains of 5.8% and 5.4%. Phoenix, alongside Seattle, had high year-over-year rent growth driven by annual employment growth of 2.6% and 2.9%.
Phoenix and Seattle’s year-over-year rent growth was driven largely by annual employment growth of of 2.6% and 2.9%, respectively, larger than the national average of 1.4%.
Whether buying a home or renting a home is more affordable often depends on the type of market. While buying is the more affordable option in just a little more than half of U.S. counties, it tends to be the less affordable option in more dense metro areas, according to ATTOM Data Solutions’ latest Rental Affordability report.
Overall, buying is more affordable in 53% of the 855 counties ATTOM Data Solutions tracks.
Acknowledging the current affordable housing crunch, Todd Teta, Chief Product Officer at ATTOM Data, said, “For sure, either buying or renting is a financial stretch or out of reach for individual wage earners throughout most of the country in the current climate. But with interest rates falling, owning a home can still be the more affordable option, even as prices keep rising.”