Rents still rising but investors are seeing slower annual increases: CoreLogic

Residential real estate investors focused on the rental market have seen returns from monthly rent income increase over recent years, and the latest stats show a continued uptick.

But a new analysis of national and major metro rents shows that only one of the four segments of the market posted a higher annual increase in rent in February compared to the annual rise seen a year earlier, although the pace was the highest in 10 months.

The latest CoreLogic Single-Family Rent Index gained 3.4% year-over-year, the largest hike since April 2023, but it also suggests a slow shift in renter preferences back to larger, more expensive coastal metros.

New York (6.9%), Seattle (6.8%), and Boston (6.4%) saw the largest annual increases in rent growth and these three had median rent prices above $3,000. A year earlier, it was smaller and less expensive metros including St. Louis, Charlotte, North Carolina, and Orlando, Florida, that led the gains.

“Single-family rent growth regained strength in February, posting the highest annual appreciation since April 2023,” said Molly Boesel, principal economist for CoreLogic. “Monthly rent growth also picked up in February and was higher than what is typically recorded in winter months.”

Lower-priced properties had the smallest annual rent growth in February with those priced at 75% or less of the regional median posting just 2.5% year-over-year increase compared to the 7.3% recorded in February 2023.

“However, properties in this price range have seen gains of more than 30% over the past four years, a slightly larger increase than those in the higher-priced range,” Boesel noted.

For lower-middle tier rentals (75% to 100% of the regional median) rents were up 3.1%, down from 5.7% in February 2023, while for higher-middle priced (100% to 125% of the regional median) the gain was 3.1%, down from 4.4% in February 2023.

The higher-priced (125% or more above the regional median) tier recorded the largest rise, up 3.2%, and was the only segment to see an increase from the February 2023 stats (3.1%). It was also the only segment to match core inflation for the month, which was higher than expected.