Houston Rent Growth Remains Strong Due to Hurricane Harvey
- National rent growth decelerated in November 2017 compared with November 2016
- High-end segment growth accelerated in November 2017 compared with November 2016
- Of 20 select metros analyzed, only Honolulu and Miami experienced a decrease in single-family rents in November
National single-family rent prices climbed steadily between 2010 and 2017, as measured by the CoreLogic Single-Family Rent Index (SFRI). However, the Index shows overall year-over-year rent growth has decelerated slowly since it peaked early last year (Figure 1). In November 2017, single-family rents increased 2.7 percent year over year, a 1.6-percentage point decline since the growth rate hit a high of 4.3 percent in February 2016. The Index measures changes to the cost to rent single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. The analysis is conducted both nationally and for 75 individual Core Based Statistical Areas (CBSAs).
Using the Index to analyze specific price tiers reveals important differences. Figure 1 shows that the Index’s overall growth in November 2017 was pulled down by the high-end rental market, which is defined as properties with rent prices 125 percent or more of a region’s median rent. Rent prices on higher-priced rental homes increased 2.3 percent year over year in November 2017, up from a gain of 1.7 percent in November 2016. Rent prices in the low-end market, defined as properties with rents less than 75 percent of the regional median rent, increased 3.8 percent year over year in November 2017, down from a gain of 5 percent in November 2016.
Rent growth varies significantly across metro areas. Figure 2 shows the year-over-year change in rent prices for 20 select CBSAs in November 2017. Seattle-Bellevue-Everett, Wash., had the highest year-over-year rent growth with an increase of 5 percent. Only two CBSAs among this group of 20 showed a decrease in rent prices: Urban Honolulu, Hawaii (-1.6 percent) and Miami-Miami Beach-Kendall, Fla. (-0.2 percent). The November 2017 results for Houston is notable with rent growth of 2.5 percent year over year in November 2017, compared with a decline of 1.5 percent in November 2016. While rents in Houston are showing strength due to increased demand after Hurricane Harvey, markets in Florida continue to show weakening rent growth despite Hurricane Irma. Tampa-St. Petersburg-Clearwater, Fla showed 1.5 percent point lower year-over-year increases in rents compared with November 2016. Miami-Miami Beach-Kendall, Fla. continued to experience rent decrease in November 2017.
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