Potential annual gross rental returns decreased in 59.4 percent of counties from 2019 to 2020 according to Attom Data Solutions’ 2020 U.S. Single Family Rental Market Report.
Attom’s report studied single-family rental returns in 389 U.S. counties with a population of at least 100,000 that contained sufficient rental data gathered from the U.S. Department of Housing and Urban Development and home price data derived from Attom’s own recorded sales deed data.
The average annual gross rental yield thus far for 2020 is 8.4 percent, a slight decrease from an average yield of 8.6 percent in 2019.
“The business of buying single-family homes for rent has lost a little steam this year across the United States as rents aren’t rising quite as fast as prices for investment rental properties in a majority of the country,” Todd Teta, chief product officer at Attom Data Solutions, said in a statement. “But from the national perspective, things are generally holding steady for landlords in the single-family home rental market.”
Despite the overall decrease in single-family rental returns nationally, counties in Baltimore, Maryland; Vineland, New Jersey; Macon, Mobile and Atlanta, Georgia, metro areas reported strong rental returns. Baltimore City/County posted an annual gross yield of 28.9 percent; Cumberland County, New Jersey, posted a yield of 20.1 percent; Bibb County, Georgia, posted a yield of 18.2 percent; Mobile County, Alabama, posted a yield of 15.7 percent; and Clayton County, Georgia, posted a yield of 15.1 percent. Baltimore City, Cumberland and Bibb counties maintained their place as the top three counties with highest rental returns from 2019.
Out of those counties with a population of at least 1 million, the highest potential gross rental returns are in Wayne County, Michigan (14.5 percent); Cuyahoga County, Ohio (11.8 percent); Cook County, Illinois (9.3 percent); Dallas County, Texas (9.1 percent); and Harris County, Texas (8.7 percent).
Delaware County, Pennsylvania (Philadelphia metro), reported the greatest decrease in annual gross rental returns from 2019 with a decline of 30.5 percent. Other areas that saw significant return declines included Bibb County, Georgia (decreased 27.0 percent); Erie County, Pennsylvania (decreased 26.6 percent); Saint Louis County, Missouri (decreased 26.5 percent); and Sussex County, Delaware (decreased 26.4 percent).
The biggest decreases in returns from 2019 to 2020 in counties of at least one million people include Wayne County, Michigan (decreased 16.6 percent); Philadelphia County, Pennsylvania (decreased 9.6 percent); Oakland County, Michigan (decreased 8.9 percent); Franklin County, Ohio (decreased 7.0 percent); and Bexar County, Texas (decreased 4.0 percent).
San Francisco County, California (3.8 percent); San Mateo County, California (3.8 percent); Williamson County, Tennessee (3.9 percent); Kings County, New York (4.3 percent); and Santa Clara County, California (4.3 percent) all posted the lowest rental returns for 2020 among smaller counties. In those counties with a population of one million or more, Orange County, California (5.0 percent); Queens County, New York (5.1 percent); and Los Angeles County, California (5.2 percent) have the lowest potential annual gross rental returns for 2020.
Attom’s report also showed that 2019 wages rose faster than rents in 206 out of 389 counties, or 53 percent of markets. However, prices rose faster than wages in 61 percent of markets in 2019, and similarly, prices rose faster than rents in 59 percent of markets in 2019.
Additionally, the report identified 73 single family rental growth counties where average wages increased over the past year and have potential 2020 annual gross rental returns of 10 percent or greater, including Wayne County, Michigan (Detroit metro); Cuyahoga County, Ohio (Cleveland metro); Milwaukee County, Wisconsin; Shelby County, Tennessee (Memphis metro); and Macomb County, Michigan.