Residential real estate investors have seen returns easing over the past year with values rising at a slower pace and constrained by the cautious Fed rate cuts – and rent growth also appears to be under pressure.
New stats from CoreLogic reveals that annual growth nationwide for single-family homes has slowed to just 1.5% year-over-year, its lowest rate in 14 years. The November 2024 figures looked at the national market and across 20 major metropolitan areas.
However, there are several metros where rent growth is far outpacing the national average, led by Detroit at 6.1% year-over-year, which is also one of only three metros included where the average monthly rent for a single-family home is below $2,000. Detroit ($1,777) is joined in this regard by Philadelphia ($1,634) and Houston ($1,921).
Above-average growth was also seen in Washington, D.C. at 5.5% - likely partly attributable to the changeover in jobs as part of the change in political administration - followed by Honolulu at 4.3%.
At the other end of the spectrum, Austin, Texas (-2.4%); Boston (-1.5%); Phoenix (-1.2%); Tucson (-0.4%) Dallas; Orlando and San Diego (all -0.3%) posted annual rental price losses.
CoreLogic senior principal economist Molly Boesel noted that rent growth over the past two years has been supported by rising wage growth, which outpaced rent growth, and is likely to be supportive in the months ahead.
“Despite the recent slowdown in rent growth demand for rentals should remain strong as wage and job growth are anticipated to remain strong this year,” added Boesel.
The average annual rent growth is not uniform across property tiers and those that are higher-priced (125% or more than the regional median) saw rent growth of 2.2% and was the only tier to see growth greater than a year earlier (2%). The lower-priced tier (75% or less than the regional median) grew at 1.9% compared to 2.8% a year earlier.
CoreLogic’s research recently revealed that home equity growth has also seen a sharp slowdown.
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