According to the latest Single-Family Rent Index report released by CoreLogic on Tuesday, rent growth has picked up and is accelerating at a rapid speed even as the country grapples to control the pandemic. Despite reports of plummeting rents as residents of coastal cities moved to less expensive places, the overall picture is driven by high demand and low inventory — key factors in the kind of astronomical growth we’re seeing now.
“Rent increases for single-family properties rebounded in recent months and in November exceeded the pre-pandemic rate,” Molly Boesel, principal economist at CoreLogic, said in a prepared statement. “This is in contrast to rents for multifamily properties, which have decreased as tenant preferences shifted away from high-density apartment buildings to low-density, single-family homes.”
While multi-unit buildings in big cities have indeed seen a decrease in rent prices, the majority of Americans live in single-family homes and the rental vacancy rate for those has not been this low since 1994.
Rent prices increased most dramatically for higher-middle priced homes worth between 100 and 125 percent of an area’s median — rising 4 percent compared to 2.7 percent in November 2019. Lower-end homes worth less than 75 percent of an area’s median price were the only ones to see rent prices drop, from 3.6 percent the previous year to 3.3 in November 2020.
Employment rates are another key factor in a strong rental market. Cities that, like Phoenix, attract new residents for their economy continuously see some of the highest growth in the country at 9.9 percent, followed by 8.9 percent for Tucson and 6.2 percent for Las Vegas.
Due to low inventory, unemployment has yet to make as much of an impact on rental prices as many analysts predicted at the start of the pandemic. Phoenix saw such high growth despite seeing unemployment drop by 2.6 percent compared to last year, while tourist-dependent Honolulu saw a 13.3 percent drop in employment but only a 0.1 percent drop in rental prices.