Rents were on the rise in Sullivan County in Attom Data Solutions’ Q1 Single-Family Rental Market Report but flat in Washington County. Rents are rising faster than wages in both counties while home prices are increasing faster than rents. And although the average annual gross rental yield was down in both counties, it was higher than the 8.9% national average.
Attom’s report puts the current potential gross rental returns at 10.9% in Sullivan County – down from 11% – and 7.7% in Washington County – down from 9%. The national potential was down 0.3%.
The average rent on a three-bedroom home in Sullivan is $914 a month, up from $887 while it was $905 in Washington County, up from $902.
The report also put the vacancy rate on investment properties at 3.5% in Sullivan County and 3.1% in Washington County.
The number of single-family and condo investment property investors up 23% in the Johnson City Metropolitan Statistical Area (MSA) and up 18% in Kingsport-Bristol MSA while the number of investment properties is up 24% in Johnson City MSA and up 20% in Kingsport-Bristol.
The report analyzed single-family rental returns in 449 U.S. counties each with a population of at least 100,000 and sufficient rental and home price data. Rental data was from the U.S. Department of Housing and Urban Development, and home price data was from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions.
“Despite declining returns in many areas, the single-family rental market continues to grow thanks to more activity by smaller and middle-tier investors,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “The biggest increase in market share over the past year has come among investors owning six to 10 single family rentals, followed by those owning between 11 and 100 rentals. These smaller to mid-tier investors are benefitting from newfound efficiencies in acquisition, financing and property management that allow them to buy outside their backyard in areas with higher potential returns, and to leverage their money to buy more properties.”
Investors on the local and national level have continued putting their money into cash flowing assets such as rental properties as a hedge against a stock market that is beginning to show signs of weakness. The single and multi-family markets are still strong, but the single-family market is not seeing as much competition and supply-demand turmoil as the multi-family market. There are reports that the investor group that owns most of the large complexes in Kingsport is looking to sell those properties. That dovetails with other changes in ownership that have increased the pressure for higher apartment rents at many of the established complexes.
For its report, Attom looked at all U.S. counties with a population of 100,000 or more and with sufficient home price and rental rate data. Rental returns were calculated using annual gross rental yields: the 2016 50th percentile rent estimates for three-bedroom homes in each county from the U.S. Department of Housing and Urban Development (HUD), annualized, and divided by the median sales price of residential properties in each county.
ATTOM Data Solutions also incorporated weekly wage data from the Bureau of Labor Statistics and demographic data from the U.S. Census into the report.