Increasing Rents on Single-Family Properties Suggest Robust Tenant Demand

July 2016 – Morningstar Credit Ratings, LLC 

Tenant demand for single-family rental properties remains strong, with rent increases in securitized properties approaching 6%. Over the past 18 months, rents rose for most properties in 23 single-borrower, single-family rental securitizations, according to an examination of roughly 90,000 single-family rental properties in nearly 100 metropolitan statistical areas. These rent boosts outpaced the year-over-year increases of three- and four-bedroom RentRange, LLC median rents for properties in similar MSAs.

These rental trends have met the expectations of Morningstar Credit Ratings, LLC. Rent increases from new tenants showed more seasonality than rental growth from renewals, leading to higher rent changes in summer. Rent increases generally were higher for institutional owners, because they tend to push rental rates more aggressively than smaller landlords. This is due in part to the institutions having more data, resources, and analytical tools. Institutions may have different economic incentives than smaller landlords.

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