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Has the Single-Family Rental Market Peaked?

ATTOM: The business of buying single-family homes to rent lost some steam after rents stopped increasing as fast as the purchase cost for those rental properties.

SAN FRANCISCO – Rental returns on single-family homes decreased from a year ago in the first quarter in more than half of the 389 U.S. counties tracked by ATTOM Data Solutions, according to the real estate firm’s Q1 2020 Single-Family Rental Market report.

On average, the annual gross rental yield was 8.4% in the first quarter (measuring the annualized gross rent income divided by the median purchase price of single-family homes).

“The business of buying single-family homes for rent has lost a little steam this year across the United States as rents aren’t rising quite as fast as prices for investment rental properties in the majority of the country,” says Todd Teta, chief product officer at ATTOM Data Solutions.

“But from the national perspective, things are generally holding steady for landlords in the single-family home rental market,” he adds. “Also, profit trends are moving in favor of investors in higher-rent counties and against those in lower-rent regions.”

The counties with the highest potential annual gross rental yields for 2020, according to the report, are:

  • Baltimore City/County, Md.: 28.9%
  • Cumberland County, N.J., in the Vineland-Bridgeton metro area: 20.1%
  • Bibb County, Ga., in the Macon metro area: 18.2%
  • Mobile County, Ala.: 15.7%
  • Clayton County, Ga., in the Atlanta metro area: 15.1%

Baltimore City, Cumberland and Bibb counties also had the top three yields in 2019, ATTOM researchers said.

The report noted the top growth markets for single-family homes include Detroit, Cleveland, Milwaukee and Memphis. These areas are showing increasing wages over the past year and carry a potential 2020 annual growth rental yields of 10% or higher.

However, prices rose faster than rents in 59% of the markets that ATTOM researchers tracked in the first quarter. The largest annual gross rental yield decreases for 2020 compared to 2019 in the first quarter were in Delaware County, Pa., in the Philadelphia metro area (down 30.5%); Bibb County, Ga., in the Macon metro area (down 27%); Erie County, Pa. (down 26.6%); Saint Louis County, Mo. (down 26.5%); and Sussex County, Del., in the Salisbury metro area (down 26.4%).

Source: ATTOM Data Solutions

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