Economic growth helped to accelerate single-family rental prices in 2019, and that momentum is expected to continue for the rental market well into 2020, according to CoreLogic’s Principal Economist Molly Boesel.
Demand remains strong as rental vacancies reached a record low in the fourth quarter of 2019, CoreLogic reports in its latest Single-Family Rent Index. U.S. single-family rent prices rose 2.9% year-over-year in December 2019.
“Strong economic growth, including the lowest unemployment rate in over 50 years, helped push up rents by an average of 3% in 2019, which was the fastest annual rent appreciation since 2016,” Boesel says. “Employment growth is expected to remain strong in 2020. This, coupled with rental vacancies reaching a 34-year low in the last quarter of 2019, could lead to continued rent increases in the near term.”
Single-family rentals considered in the “low end” tier (properties with rent prices less than 75% of the regional median) saw the highest national rent growth in December. Prices in this tier rose 3.4% year over year in December 2019. For comparison, high-end rentals (those defined as properties with rent prices greater than 125% of a region’s median rent) rose 2.5% annually in December, CoreLogic reports.
Overall, Phoenix saw the highest annual rent increase at 6.7%. This marks the 13th consecutive month Phoenix has had the highest annual increases in single-family rents. Tucson, Ariz., came in second on the list with highest rent price growth in December 2019; annual price gains were at 5.7%.
“Strong rent growth in the Southwest reflects strong population growth in this part of the U.S.,” says Boesel. “Arizona ranked third for population growth in 2019 by both number and percentage increase, according to the U.S. Census Bureau. In contrast, Illinois and Hawaii both had a decrease in population in 2019, which could account for the slower rent growth in these regions.”
Source: CoreLogic
