The big divergence of asking rents in 14 big metropolitan areas by single-family rentals and multifamily units.
By Wolf Richter for WOLF STREET.
Asking rents – the rents that landlords advertise for their vacant rental properties – soared during the pandemic. But not in lockstep across different markets. And in some markets, rents have started to decline, while they continue rising in others. And asking rents for single-family homes have massively diverged from asking rents for units in multifamily buildings.
Since January 2020, mid-tier asking rents across the US for units in multifamily buildings have surged by 32%; that’s bad enough. But for single-family homes, mid-tier asking rents have exploded by 51% over the same period, such as by 69% in Miami, by 58% in Atlanta, or by 56% in Phoenix, according to the Zillow Observed Rent Index (ZORI).
Year-over-year, mid-tier multifamily asking rents rose by 1.0% in March, and on a month-to-month basis were essentially flat for the eighth month in a row, seasonally adjusted (blue in the chart). But single-family rents were still up 2.4% year-over-year and have continued to tick higher in recent months, but at a slower rate, seasonally adjusted (red).
And the difference between multifamily and single-family asking rents has widened to 26.7% in March, the highest in the data, over double of what it had been before the pandemic.
By metropolitan area, the gap between multifamily and single-family rents ballooned to 71% in the Denver metro, to 66% in the Los Angeles metro, 54% in the Dallas-Fort Worth metro, and 51% in Phoenix. At in some of our 14 metros here, the gap was relatively narrow: 20% in Boston, 17% in Chicago, and 13% in the vast New York City metro, where Manhattan is mostly very expensive multifamily.
There are about 50 million rental units of all types in the US. About 15 million of them, or about 30%, are single-family rental homes (SFRs), of which about 82% are owned by mom-and-pop landlords with 1-10 rentals, and the rest by larger landlords, including a handful of giant landlords.
Asking rents are not actual rents that current tenants pay.
Asking rents are advertised rents on units that landlords have not been able to rent out yet and that are still vacant and advertised as for rent. These are not rents that current tenants are actually paying.
When rents come under downward pressure, as they’re now, after the huge surge, current tenants might be paying higher rents than asking rents, and might even agree to a small rent increase at renewal time in order to avoid having to move, while new leases might be signed at lower rents.
Invitation Homes, one of the giant single-family landlords, provided some details on these dynamics during its earnings report yesterday. Year-over-year:
- Renewal rents: +3.7%
- New-lease rents (close to asking rents): -3.0%.
Single-family and multifamily asking rents in 14 big markets.
The US rental market is not monolithic. Each market is different. Here we’re looking at 14 big metropolitan areas by asking rents for mid-tier single-family and multifamily homes, per the seasonally adjusted ZORI.
New York City metro:
- Multifamily ZORI: $3,271
- Month-to-month: +0.2%
- Year-over-year: +3.9%
- Since Jan 2020: +37%
- Single-family ZORI: $3,700
- Month-to-month: +0.6%
- Year-over-year: +4.4%
- Since Jan 2020: +50%
Difference between multifamily and single-family rents: 13%.
Note the drop in multifamily asking rents during the early part of the pandemic, as people were bailing out of the city, and the surge afterwards, as they returned and scrambled to rent a place.
San Francisco metro:
- Multifamily ZORI: $2,957
- Month-to-month: +0.5%
- Year-over-year: +6.0%
- Since Jan 2020: +10%
- Single-family ZORI: $4,300
- Month-to-month: +0.4%
- Year-over-year: +4.6%
- Since Jan 2020: +27%
Difference between multifamily and single-family rents: 36%.
Also this drop in multifamily asking rents during the early part of the pandemic, as people were leaving the city to work from home somewhere else, and the surge afterwards. In early 2021, asking rents had dropped to the lowest since late 2015. While single-family rents soared.
Los Angeles metro:
- Multifamily ZORI: $2,957
- Month-to-month: -0.1%
- Year-over-year: +0.5%
- Since Jan 2020: +42%
- Single-family ZORI: $4,408
- Month-to-month: -0.1%
- Year-over-year: +0.5%
- Since Jan 2020: +26%
Difference between multifamily and single-family rents: 66%.
Chicago metro:
- Multifamily ZORI: $2,115
- Month-to-month: +0.5%
- Year-over-year: +5.4%
- Since Jan 2020: +38%
- Single-family ZORI: $2,479
- Month-to-month: +0.3%
- Year-over-year: +4.0%
- Since Jan 2020: +51%
Difference between multifamily and single-family rents: 17%.
Dallas-Fort Worth metro:
- Multifamily ZORI: $1,505
- Month-to-month: -0.2%
- Year-over-year: -0.9%
- Since Jan 2020: +20%
- Single-family ZORI: $2,313
- Month-to-month: -0.3%
- Year-over-year: +0.3%
- Since Jan 2020: +41%
Difference between multifamily and single-family rents: 54%.
Austin metro:
- Multifamily ZORI: $1,437
- Month-to-month: -0.3%
- Year-over-year: -3.7%
- Since Jan 2020: +10%
- Single-family ZORI: $2,313
- Month-to-month: -0.3%
- Year-over-year: +0.3%
- Since Jan 2020: +41%
Multifamily is under serious downward pressure amid an onslaught of supply, while single-family rents are easing only gradually, and the difference between the two has exploded to 56%.
Washington D.C. metro:
- Multifamily ZORI: $2,238
- Month-to-month: -0.4%
- Year-over-year: -1.6%
- Since Jan 2020: +17%
- Single-family ZORI: $3,144
- Month-to-month: +0.2%
- Year-over-year: +2.3%
- Since Jan 2020: +40%
Difference between multifamily and single-family rents: 41%.
Philadelphia metro:
- Multifamily ZORI: $1,801
- Month-to-month: +0.2%
- Year-over-year: +2.7%
- Since Jan 2020: +30%
- Single-family ZORI: $3,144
- Month-to-month: +0.5%
- Year-over-year: +3.6%
- Since Jan 2020: +49%
Difference between multifamily and single-family rents: 22%.
Miami metro:
- Multifamily ZORI: $2,501
- Month-to-month: +0%
- Year-over-year: +0.5%
- Since Jan 2020: +51%
- Single-family ZORI: $3,303
- Month-to-month: +0%
- Year-over-year: +1.0%
- Since Jan 2020: +69%
Difference between multifamily and single-family rents: 32%.
Atlanta metro:
- Multifamily ZORI: $1,635
- Month-to-month: -0.3%
- Year-over-year: +0.2%
- Since Jan 2020: +25%
- Single-family ZORI: $2,204
- Month-to-month: -0.1%
- Year-over-year: +1.9%
- Since Jan 2020: +58%
Difference between multifamily and single-family rents: 35%.
Boston metro:
- Multifamily ZORI: $3,105
- Month-to-month: +0.1%
- Year-over-year: +1.2%
- Since Jan 2020: +31%
- Single-family ZORI: $3,733
- Month-to-month: +0.5%
- Year-over-year: +5.7%
- Since Jan 2020: +47%
Difference between multifamily and single-family rents: 20%.
Phoenix metro:
- Multifamily ZORI: $1,513
- Month-to-month: -0.4%
- Year-over-year: -2.6%
- Since Jan 2020: +33%
- Single-family ZORI: $2,280
- Month-to-month: -0.1%
- Year-over-year: +0.7%
- Since Jan 2020: +56%
Difference between multifamily and single-family rents: 51%.
Seattle metro:
- Multifamily ZORI: $2,066
- Month-to-month: -0.2%
- Year-over-year: +0.5%
- Since Jan 2020: +23%
- Single-family ZORI: $3,256
- Month-to-month: +0.3%
- Year-over-year: +3.2%
- Since Jan 2020: +44%
Difference between multifamily and single-family rents: 58%.
Denver metro:
- Multifamily ZORI: $1,725
- Month-to-month: -0.4%
- Year-over-year: -2.4%
- Since Jan 2020: +16%
- Single-family ZORI: $3,256
- Month-to-month: 0%
- Year-over-year: +0.9%
- Since Jan 2020: +37%
Difference between multifamily and single-family rents: 71%. Mid-tier single-family rentals in the Denver metro are nearly as expensive as in San Francisco. Multifamily rentals are over $1,200 cheaper than in San Francisco.
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