Single-family rental returns drop to nine-year low
IRVINE, Calif. Oct. 20, 2016 ATTOM Data Solutions' Q3 2016 Single Family Rental Market Report found that average single-family rental (SFR) returns dropped to a nine-year low for homes purchased so far in 2016.
The average annual gross rental yield monthly rent, annualized, divided by median home price among the 473 counties studied was 8.7 percent for properties purchased in the first seven months of 2016, down from an average of 8.8 percent for the same time period in 2015 and the lowest level since 2007, when the average gross rental yield across the 473 counties was 7.3 percent.
An interactive map displaying SFR returns in all Florida and U.S. counties included in the analysis isposted on ATTOM's website.
"While average rental returns on properties purchased so far in 2016 are at a nine-year low, these returns are still attractive compared to alternative investing opportunities," says Daren Blomquist, senior vice president at ATTOM Data Solutions.
"After a drop-off in single family purchases by both individual and institutional investors over the past two years, we're starting to see investor acquisition activity pick up again," Blomquist adds. "Given shifting attitudes toward homeownership and our data showing more than 18 million non-owner-occupied single-family homes one in every four single-family homes these single-family rental investors will be an important and likely growing force in the real estate market for years to come."
Counties where institutional investor purchases are increasing
Nationwide, 2.7 percent of all single-family homes sold in the first seven months of 2016 were purchased by institutional investors entities that bought at least 10 properties in a calendar year. That percent is up 29 percent from a 2.1 percent share in the first seven months of 2015 and follows two consecutive years of declines. Over the last decade, institutional investment peaked in 2008 at 8.4 percent.
"The single-family rental operations have been proven in a public market. These homes can be managed like apartments," says Gary Beasley, CEO and co-founder at Roofstock, an online marketplace for performing, tenant-occupied single family rental homes.
"When we first got started, we thought we could do that, but in the last year or so investors are really starting to believe it," Beasley adds. "You've seen a couple of the public companies ramp back up on buying along with other institutional investors who have been on the sidelines who now want to get involved."
Among the 473 counties analyzed for the report, 322 counties (68 percent) posted year-over-year increases in share of institutional investor purchases, including Philadelphia County, Pennsylvania (up 72 percent); Cuyahoga County (Cleveland), Ohio (up 45 percent);Orange County (Orlando), Florida (up 25 percent); Franklin County (Columbus), Ohio (up 28 percent); and Saint Louis County, Missouri (up 93 percent).
Counties where institutional investor purchases are highest
Georgia is home to seven of the top counties for total institutional investors purchases, with two Alabama counties and one in Texas rounding out the top 10. No Florida counties made ATTOM's top 10 list for total institutional investor purchases.
More data on top investment opportunities cited by ATTOM
- SFR returns interactive county heat map
- Institutional investor SFR purchases interactive county heat map
- 22 best SFR markets with low vacancy rates
- 19 best SFR markets with wage growth
- 18 best SFR markets with low owner-occupancy rates
- 17 best SFR markets that are millennial meccas
- 18 best SFR markets with low competition from institutional investors (hidden gems)