As high interest rates push more would-be homeowners into the rental market, Single-family home rents are climbing in the state’s major metros.
Rents in three of the Lone Star State’s largest markets rose an average of 12.2 percent year over year in May according to the latest CoreLogic Single-Family Rent Index report. That’s still less than the national average, where single-family rent growth continued to set records in May, with a 13.9% increase from May 2021.
Single-family rents in the Dallas-Plano-Irving market rose by 13.72 percent year on year in May. The median monthly rent for a single family home there in April was $2,092.
In the Austin-Round Rock market, single-family rents in May 2022 increased by 13.41 percent, up from 10.83 percent in May 2021. The median monthly rent there for a single family home in April was $2,014.
The rise in single-family rents in the Houston-The Woodlands-Sugar Land market was a bit more modest, rising by just 9.68 percent over the previous year. The median rent in the Houston area in April for a single family home was $1,755.
Texas is a favorite sandbox of Wall Street players getting into the single-family rental market. Almost a third of all Texas homes sold last year were bought by institutional investors that paid cash — with most aiming to turn them into single-family rentals. The state’s percentage of homes scooped by investors last year — 28 percent — was more than double the national average of 13 percent.
Some deep-pocketed institutional players are also getting into the development game with “build-to-rent” projects rolling out across the state, drawing the ire of Lone Star developers who have to compete.
But many institutional investors are backing off their aggressive push to corner the market on Texas’ single-family homes, as high interest rates drive up the cost of financing.
There may be some relief for renters in sight. The May growth rate represents the first time that price growth did not accelerate from the previous month since January 2021, according to CoreLogic.
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