Year-over-year rental prices for single-family homes in most major markets increased more in December 2020 than in December 2019, despite a pandemic-fueled slowdown in late winter and early spring, according to a CoreLogic report. Chicago was one of the few markets in which year-over-year rental prices fell from December 2019 levels.
Nationally, rent growth reached pre-pandemic rates by October. Data from December indicates rents rose by 3.8% year-over-year, compared to a 2.9% jump in December 2019. Single-family rentals were in demand as families sought homes that offered more space. Demand for multifamily rentals fell in markets across the country. Some areas saw lower growth or declines in rents.
In the Chicago-Naperville-Arlington Heights, IL metropolitan area, rents for single-family homes fell by 0.9% year-over-year in December. The area’s median rent for a single-family home in November was $1,905.
“In the final months of 2020, single-family rents posted the highest increases in over four years,” said Molly Boesel, principal economist at CoreLogic. “However, single-family rent price reaction to the pandemic and resulting recession differed greatly across metros. While rents in the Southwest U.S. strengthened, in some areas of the country — in particular, areas relying heavily on tourism — rents softened.”
CoreLogic looked at four tiers of rental prices to capture an accurate picture of the state of single-family rental prices: lower-priced (75% or less than the regional median); lower-middle priced (75% to 100% of the regional median); higher-middle priced (100% to 125% of the regional median); and higher-priced (125% or more than the regional median). Year-over-year rental price growth increased from December 2019 for three categories: lower-middle (3.6%, up from 3.1%); higher-middle (4.1%, up from 2.7); and higher-priced (4.3%, up from 2.4%). Price growth fell year-over-year for homes in the lower-priced category, from 3.5% in December 2019 to 3.3%.
Nationally, Phoenix, AZ had the largest year-over-year increase in single-family rents at 10.7%, followed by Tucson, AZ at 9.5% and Charlotte, NC at 7.1%. Boston, MA had the biggest year-over-year decrease, with rents dropping by 7.2% due to the pandemic-related absence of college students, who typically move in for the fall semester. Honolulu, HI was the only city other than Chicago and Boston among the 20 studied to experience a drop in rental prices at -0.1%.
CoreLogic anticipates mixed growth rates for rental prices across the nation as states roll out their vaccine administration programs and continue to work to mitigate unemployment rates.