The June single-family rent increase of 7.5% was the highest year-over-year hike since at least January 2005, according to the CoreLogic Single Family Rent Index.
The increase was also five-times that of the hike a year earlier. Rent growth is running well above pre-pandemic levels when compared with 2019, the index showed.
CoreLogic said the rapid increase was propelled by the preference of people for detached rentals, up 10.5% versus 4.6% for attached units. Detached properties are overwhelmingly preferred by would-be homebuyers who have been either priced out of the market or unable to find a home in today’s supply-constrained market.
“Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals. As space and affordability remain top priorities for renters, we can expect to see a similar trend as in the for-sale market—increased migration to less dense and lower cost areas,” the company said in its study.
Overall, Phoenix stood out with the highest year-over-year rent growth for 20 major markets in June for single family rentals as it has for most of the last three years, with an increase of 16.5%, followed by Las Vegas, Nevada (+12.9%) and Tucson, Arizona (+12.5%), CoreLogic noted.
Two metro areas experienced annual declines in rent prices: Boston (-2.7%) and Chicago (-1%).
Boston and Chicago were also cited by CoreLogic as the only two of 20 major metros to have lower rent growth than a year ago, with Boston showing a deceleration of 2.8 percentage points and Chicago showing a deceleration of 1.5 percentage points from June 2020.
The massive number of renters who had to work from home during the pandemic and are continuing to do so has added to the attractiveness of detached homes and larger apartments.
About 35% of apartment hunters say they’ll upsize their apartments to set up proper home offices, RENTCafe found in a recent survey.
“Granted, space has been a persistent challenge for apartment-dwellers in the last year and a half,” RENTCafe’s Florentina Sarac writes in an analysis of May survey data. “But, for that one-third, the realization that working from home is now a more permanent set-up has just turned a temporary need for extra space into a long-term necessity.”