The Rental Picture

Article Courtesy of Michael Orr
The Cromford Report

The percentage of people renting their home has increased significantly since 2007 because so many individuals and families have lost the house they once owned to foreclosure or short sale.
  
Although the majority of rental transactions happen outside of the ARMLS system, a significant number are advertised and conducted through ARMLS and their transaction database gives us a very useful sample of what is happening out there in the rental world, particularly for single family detached homes. 


Demand:
On September 11, the rate with which leases are being signed is 2,828 per month. This compares with 2,553 on September 11, 2010 and 2,425 on September 11, 2009. A growth rate of 5.3% from 2009 to 2010 has doubled to 10.8% over the last year. These figures are for all property types. If we look exclusively at single family detached homes there were 2,222 per month in 2011, 1,900 in 2010 and and 1,891 in 2011, all measured on September 11. The growth rates were almost zero from 2009 to 2010 but nearly 17% from 2010 to 2011. Notice that single family detached homes were 79% of the total rental leases closed through ARMLS in the most recent month, up from 74% last year.


Supply:
On September 11, there are 4,893 single family detached homes offered for lease out of a total number active listings of 7,059. First we can see that the single family homes constitute only 69% of the active listings but 79% of the closed leases, suggesting that their turnover is faster than for condos and mobile homes. However that 69% has grown from only 58% at the same date last year. In fact supply of single family detached homes reached an unusually low number of only 2,852 on April 1, 2011 and has increased by nearly 72% since then. Clearly a large number of new rental homes are coming onto the market to meet the strengthened demand. In fact supply is growing faster than demand judging from the last 5 months, although this is coming off a period when supply was falling fast.


Pricing:
The average rental rate across the ARMLS territory for single family homes is currently between 68c and 69c per sq ft. Last year at this time it was 66c to 67c so we have seen a slight increase in rental rates over the twelve month period. This continues a trend from 2009 since we were measuring 64c to 65c back then. It remains to be seen whether this pattern will continue now that supply seems to be on a strong upward trend.


Although we do not publish rental charts on this web site, we do run a number of custom Cromford rental reports for clients and if you wish to dig deeper into this data please send an email describing your needs and requesting a price quote.