Potential Rental Returns Decrease from a Year Ago in 59 Percent of Counties Analyzed; Highest Potential SFR Returns in Baltimore, Vineland, Macon, Mobile and Atlanta Metros
IRVINE, Calif. – March 12, 2020 — ATTOM Data Solutions, curator of the nation’s premier property database first property data provider of Data-as-a-Service (DaaS), today released its Q1 2020 Single-Family Rental Market report, which ranks the best U.S. markets for buying single-family rental properties in 2020.
The report analyzed single-family rental returns in 389 U.S. counties with a population of at least 100,000 and sufficient rental and home price data. Rental data comes from the U.S. Department of Housing and Urban Development, and home price data comes from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions.
The average annual gross rental yield (annualized gross rent income divided by median purchase price of single-family homes) among the 389 counties is 8.4 percent for 2020, down slightly from an average 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,” said Todd Teta, chief product officer at ATTOM Data Solutions. “But from the national perspective, things are generally holding steady for landlords in the single-family home rental market. Also, profit trends are moving in favor of investors in higher-rent counties and against those in lower-rent regions.”
Counties in Baltimore, Vineland, Macon, Mobile and Atlanta metro areas post highest rental returns
Counties with the highest potential annual gross rental yields for 2020 are Baltimore City/County, MD (28.9 percent); Cumberland County, NJ, in the Vineland-Bridgeton metro area (20.1 percent); Bibb County, GA, in the Macon metro area (18.2 percent); Mobile County, AL (15.7 percent); and Clayton County, GA, in the Atlanta metro area (15.1 percent). Baltimore City, Cumberland and Bibb counties also had the top three yields in 2019.
Among counties with a population of at least 1 million, the highest potential gross rental yields in 2020 are in Wayne County (Detroit), MI (14.5 percent); Cuyahoga County (Cleveland), OH (11.8 percent); Cook County, IL (9.3 percent); Dallas County, TX (9.1 percent); and Harris County, TX (8.7 percent).
Rental returns decrease from a year ago in over half the counties analyzed
Potential annual gross rental yields for 2020 decreased compared to 2019 in 231 of the 389 counties analyzed in the report (59.4 percent), led by Delaware County, PA, in the Philadelphia metro area (down 30.5 percent); Bibb County, GA, in the Macon metro area (down 27.0 percent); Erie County, PA (down 26.6 percent); Saint Louis County, MO (down 26.5 percent); and Sussex County, DE, in the Salisbury metro area (down 26.4 percent).
The biggest decreases in potential annual gross rental yields for 2020 compared to 2019 among counties with a population of at least 1 million are Wayne County, MI (down 16.6 percent); Philadelphia County, PA (down 9.6 percent); Oakland County, MI, in the Detroit metro area (down 8.9 percent); Franklin County, OH (down 7.0 percent); and Bexar County, TX (down 4.0 percent).
Counties in San Francisco, New York, and Nashville metro areas post lowest rental returns
Counties with the lowest potential annual gross rental yields for 2020 are San Francisco County, CA (3.8 percent); San Mateo County, CA (3.8 percent); Williamson County, TN, in the Nashville metro area (3.9 percent); Kings County (Brooklyn), NY (4.3 percent); and Santa Clara County, CA (4.3 percent).
Along with Kings County and Santa Clara County, the lowest potential annual gross rental yields in 2020 among counties with a population of at least 1 million are in Orange County, CA (5.0 percent); Queens County, NY (5.1 percent); and Los Angeles County, CA (5.2 percent).
Wages rising faster than rents in 53 percent of markets
Wages rose faster than rents in 2019 in 206 of the 389 counties analyzed (53.0 percent), including Harris County (Houston), TX; King County (Seattle), WA; San Bernardino County, CA; Bexar County (San Antonio), TX and Wayne County (Detroit), MI.
Rents rose faster than wages in 183 of the 389 counties analyzed (47.0 percent), including Los Angeles County, CA; Cook County (Chicago), IL; Maricopa County (Phoenix), AZ; San Diego County, CA and Orange County, CA, in the Los Angeles metro area.
Prices rising faster than rents in 59 percent of markets
Prices rose faster than rents in 2019 in 231 of the 389 counties analyzed (59.4 percent), including Harris County (Houston), TX; Maricopa County (Phoenix), AZ; Kings County (Brooklyn), NY; Riverside County, CA and San Bernardino County, CA.
Rents rose faster than prices in 2019 in 158 of the 389 counties analyzed (40.6 percent), including Los Angeles County, CA; Cook County (Chicago), IL; San Diego County, CA; Orange County, CA, in the Los Angeles metro area, and Miami-Dade County, FL.
Prices rising faster than wages in 61 percent of markets
Prices rose faster than wages in 2019 in 238 of the 389 counties analyzed (61.2 percent), including Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego, County, CA; Orange County, CA, in the Los Angeles metro area, and Miami-Dade County, FL.
Wages rose faster than prices in 151 of the 389 counties analyzed (38.8 percent), including Cook County (Chicago), IL; Harris County (Houston), TX; Queens County, NY; King County (Seattle), WA and Clark County (Las Vegas), NV.
Best SFR growth markets include Detroit, Cleveland, Milwaukee, and Memphis
The report identified 73 “SFR Growth” counties where average wages grew over the past year and with potential 2020 annual gross rental yields of 10 percent or higher.
The 73 SFR Growth markets include Wayne County (Detroit), MI; Cuyahoga County (Cleveland), OH; Milwaukee County, WI; Shelby County, TN, in the Memphis metro area; and Macomb County, MI.
Methodology
For this report, ATTOM Data Solutions 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 2020 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 single family homes in each county.
ATTOM Data Solutions incorporates the most recent (Q3 2019) weekly wage data from the Bureau of Labor Statistics.
About ATTOM Data Solutions
ATTOM Data Solutions provides premium property data to power products that improve transparency, innovation, efficiency and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes and enhances the data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 9TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, marketing lists, match & append and introducing the first property data delivery solution, a cloud-based data platform that streamlines data management – Data-as-a-Service (DaaS).
