During the pandemic, there has been a movement away from density to detached homes. But that soon could be changing as companies bring workers back to the office, according to CoreLogic.
"This could help increase the demand for attached rental properties in the near future, as people move back towards city centers to decrease their commute time," it says.
But right, now detached is still in favor in most markets. In February, rent prices for detached properties increased 6.5%. That was a 3% increase from February 2020 and a record high in rent growth for detached properties according to the CoreLogic Single-Family Rent Index (SFRI). The SFRI measures rent changes among single-family residences, including condominiums.
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On the other hand, attached properties registered just a 0.9% year-over-year increase in February 2021. This was down from 3% in February 2020 and only 0.1 percentage point above the 0.8% year-over-year increase in June 2020.
"The pandemic increased demand for lower density living, as people sought more space—be it for a home office or for extra social distancing," according to CoreLogic. "That desire has translated into higher rent growth for detached properties. As a result, many people moved out of condos and apartments in the center of cities to detached properties in lower-density areas."
However, detached and attached performance varies across metros. Phoenix, which had the highest year-over-year rent growth of 11.1% in February 2021, posted double-digit growth for detached properties. In Chicago, 70% of single-family rentals are attached. Those properties are experiencing rent decreases and pulling down the overall rent growth.
In February, overall single-family rents grew 3.9% year-over-year, which was the strongest February in the past five years. After posting 1.4% year-over-year growth in June 2020, the index had strong increases since the second half of 2020. Rent growth was driven by detached properties.
Some of the interest is driven by Gen Z renters, according to research conducted by the National Apartment Association in partnership with Statisfacts/Apartment Ratings late last year.
Compared to pre-pandemic millennials who embraced both migration and dense urban cores, more than half of Gen Zers surveyed said they'll stay put after graduating from college, with 44% saying they prefer a vibrant suburb over city life. And 43% say they want to rent single-family detached properties after graduating.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
