Rental market intelligence provider RentRange recently ranked the top 25 U.S. MSAs (metropolitan statistical areas) for single-family home rental price gains, and the results were eye-opening for some markets.
Not surprisingly, California and Florida cities dominate the top 10 spots in the rankings for rental increases, with San Francisco coming in fourth place. Rental price increases came in at 17 percent, and yields increased by 5.6 percent in the City by the Bay.
The RentRange data reports increases in rental rate and yield between the third quarter of 2015 and the same quarter in 2014 in it’s new report.
“The California market experienced a lot of distress, and is now coming back,” said RentRange CEO Walter Charnoff. “Rental prices were distressed too, and landlords were not necessarily getting market-rate rents.
“Now, the markets are more normalized and there is strong price appreciation going on in California markets now.”
The other part of the new rankings report average yield, which is largely in the single digits in the California and Florida markets. With the expensive price of entry in buying investment property in these markets, yields are less than some other places on the list where prices are more moderate.
“Home prices are going up,” said Charnoff, “so the yield is a less impressive number than the rental price increase.”
He added that when the company released the ranking, people were surprised that San Francisco did not rank higher on the list.
The company’s data show that there is still great opportunity in real estate investing, but to achieve desired yield on those investment results, investors need to be more informed before buying and rehabilitating investment property. Competition for homes is also increasing with international investors still keenly interested in making acquisitions in the U.S.
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RentRange gathers rental data on approximately 250,000 single-family houses per month from a variety of contractual sources, including multiple listing services, property managers, landlords and listing web sites. Yields are derived from RentRange’s proprietary automated valuation model.
“Other data sources commingle multi- and single-family rentals,” Charnoff said. “RentRange has enough data so that we can separate the two, and can track the single family segment because of how much data we have available.”
RentRange provides market intelligence to the financial services and real estate industries, and delivers an assortment of address and geography level rental data, analytics and rent-based valuation solutions for single and multi-family properties. The company was acquired by Altisource Portfolio Solutions in October.
