Why Have SFR Days on Market Risen to 30?
Columnist Lew Sichelman digs into recent single-family rental dynamics.
Despite the increased demand for single-family rentals, it is taking longer for landlords to sign leases than it did a year ago, according to new research.
The study offered no specific reasons for the six-day jump, from a median of 25 days in the first quarter of 2022 to 30.4 days for the same period this year. But one factor could be the uncertain economy, which is preventing many people—renters and buyers alike—from changing their current housing situations.
Another reason could be the run-up in single-family rental rates. According to HouseCanary’s latest National Rental Report, the median price nationally was $2,395 in the first quarter. That’s up 8 percent from the same period last year and up nearly 20 percent from two years ago.
In comparison, asking prices for all rentals—apartments and houses alike—rose a scant 0.3 percent in April to $1,967, according to the latest report from Redfin. It was the 11th consecutive month of slowing rent growth. The highest asking rents ($2,053) were achieved in August last year, the realty brokerage said.
The increases in single-family rentals alone came despite a huge 75 percent jump in inventory, with the weekly average now at 64,200 units, HouseCanary said. A year ago, that number stood at 34,565, meaning nearly 20,000 single-family rentals have been added to the market in just 12 .
While the San Francisco-based valuation company doesn’t expect inventory to keep increasing—it “will likely remain steady or start coming down slightly over the coming year,” the report says—it doesn’t think prices will cool, either. Indeed, it expects rental rates to keep following the seasonal trend of rising until at least the end of July.
HouseCanary’s report is a nationwide snapshot based on third-party listings received from multiple listing services from 46 states and 204 metro areas. The data, the company says, is “appropriately cleaned to accurately reflect trends currently happening in the SFR space.”
That single-family rentals were taking a full month to lease at the end of the first quarter represents a 12 percent increase from the previous quarter and a whopping 43 percent jump from the same time last year.
And no matter how many bedrooms they contain, houses are now taking roughly the same number of days on the market, according to the report—from a median of 29 days for one and three-bedroom houses to 33 days for places with five bedrooms.
But HouseCanary said it is “unlikely” that marketing periods will experience any large gains going forward. Similar to the trends predicted for inventory, it said “days on the market are expected to remain steady or start trending downward.”
In the first quarter, days on the market increased by more than 50 percent in 35 metro areas. But eight saw three-digit increases. In New Orleans, marketing time jumped from 12 days to 33, a 175 percent jump. In Raleigh, it went from 21 days to 56, an increase of 167 percent.
Leasing time was more than 40 days in the Durham-Chapel Hill market, Denver and Memphis.
These markets are outliers
At the same time, days on the market slipped in just a few markets. In Punta Gorda, Fla., for example, single-family rentals “flew” off the market in just 51 days. When compared to the national median, flew is probably not the right word. But, considering that a year ago rental houses took 104 days to market, the point cannot be overstated.
Meanwhile, the supply of single-family rentals grew in huge chunks in more than 20 markets, though in most of those places the inventory is relatively small. In New Orleans, the inventory jumped 280 percent, but from just 430 units to 494. Inventories also leaped by more than 200 percent in Naples, Fla., and Denver.
Atlanta recorded a 141 percent increase in listings, from 1,538 units to 3,702.
Only two places—Albany and Omaha—reported fewer SFRs in the first quarter. But Albany also led the country in ever higher rents. Rates in the New York capital went up 30 percent, or $455, from $1,519 in Q1-‘22 to $1,974 in Q1-‘23.
Even larger year-over-year increases in single-family rental listing prices were found in New Haven, Conn., and Charleston, S.C.—$535 (a 22 percent increase) and $464 (21 percent), respectively.
On the flip side, some spots saw listing prices decline. Denver registered the largest decrease—$142, or 4.7 percent from $3,007 to $2,865.
Finally, Naples remains the most expensive market to rent a single-family residence at $5,756. The Southwest Florida area is followed by San Diego at $4,941, Los Angles at $4,911, San Jose at $4,585 and Bridgeport, Conn., at $4,211.