Single-family rental market shows little sign of cooling

SFR property rents are rising fast, with California and Florida markets leading the charge, new report shows

Two states where that demand/supply imbalance has led to spendy rents for SFR properties are California and Florida. Cities in those two states dominate the list of U.S. metro areas with the highest median monthly rents as of the close of the first half of 2022, according to the HouseCanary report.

California has five metropolitan areas on the highest SFR rental-price list, with the Los Angeles metro area leading the charge with a median monthly rent of $4,664, followed by San Diego, $4,617; San Jose, $4,294; Oxnard-Thousand Oaks-Ventura, $4,259; and the San Francisco metropolitan area, at $4,088. The Florida metro areas making the list with the highest SFR rents are Miami, $3,972; Cape Coral-Fort Myers, $3,644; and Nort Port-Sarasota-Bradenton, $3,548.

“The U.S. housing sector has been unrelentingly hot over the past year and a half as remote workers and young families fled coastal cities for the Sun Belt while supply declined in tandem, spurring double-digit increases in housing costs,” the HouseCanary report states. “… Home rentals have become more desirable in recent years as consumers have been priced out of home purchases, are unwilling to take on the financial burden of a mortgage or are drawn to the flexibility of a rental.

“However, renters hoping for relief in 2022 have been met with little solace as demand persists, prices for single-family homes have continued to grow and supply remains squeezed.”

Not all regions of the country are in the same boat when it comes to SFR affordability, of course. The Midwest leads the charge in terms of boasting the lowest median monthly SFR rents at the end of the first half of 2022. Consequently, the region dominates HouseCanary’s list of the top 10 metro areas with the least-expensive SFR rents.

Midwest cities making that list, and their median SFR rents as of the end of the first half of 2022, according to HouseCanary, include Dayton, Ohio, $1,412; Wichita, Kansas, $1,397; Akron and Canton, Ohio, $1,361 and $1314, respectively; Davenport-Moline-Rock Island, on the Iowa/Illinois border, $1,313; Flint, Michigan, $1,243; and Madison, Wisconsin, $1,000.

“States in the industrial Midwest secured seven of the 10 spots on the list [of least-expensive SFR markets],” the HouseCanary report notes. “… Renters are more noticeably gravitating toward this region in a market that is experiencing a continual increase in average national rent prices.”

As one indicator of increasing demand for SFR properties in the Midwest, four of the top 10 metro areas on the least-expensive SFR rental-price list — Canton, Wichita, Flint and Dayton — also made the list of the top 10 metro areas experiencing the largest year-over-year decreases in SFR listings. As of the end of the first half of 2022, listings in Dayton were down 15.1% compared to a year earlier.

In Flint, listings over the period were down 20.5%. In Wichita, year-over-year listings were down 35.8%; in Canton, listings were down 42%. Peoria, Illinois, recorded the biggest decline in SFR listings for the period, at nearly 69%, the report shows.

Lwowski said one of the changes brought by the pandemic — the freedom to work where you live — also has helped to drive SFR demand in the Sun Belt states where the weather is warmer. He added, however, that the rising cost of living is a factor that is helping to change that dynamic and fueling more interest in smaller metro areas in lower-cost regions of the country, like the Midwest.

“If we look just at California, where SFR rents are approaching $5,000 a month, that’s a ton of money for a lot of American families,” he said. At least initially, we’re definitely seeing that these [lower-cost] markets will continue to increase not only in price, but in demand, as fears of a recession and hardships and just searching for affordability becomes kind of a hot topic.

“With this kind of search for affordable housing, there’s going to have to be a time where either [SFR] rents [in hot markets] plateau because no one can afford them, or we’re going to see some sort of great migration where, due to the flexibility of work-from-home, people are going to start extending the reach of where they want to live.”

The HouseCanary report shows that regardless of the number of bedrooms, SFR rentals nationally all recorded year-over-year increases in monthly rental prices as of the end of the first half of 2022. Three-bedroom homes led the way on a percentage basis, with a nearly 15% price increase over the period, to an average rent of $2,295. The national average monthly rent for one-bedroom SFRs was up 7.1%, to $1,500; two-bedrooms, up 11.4%, to $2,000; four-bedrooms, up 9.8%, to $2,799; and five-bedroom SFR properties, up 5.7%, to $3,700.

“By the end of H1 2022, rental properties [nationally] stayed on the market for an average of 21 days, a roughly 5% increase from the same period in 2021,” the HouseCanary report states. “… [Although] rentals saw longer days on market, the fluctuation of total days on market throughout the period, as well as the overall increase in price, indicates that while the market might be cooling slightly, demand has not yet subsided across much of the country.”

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