The reduced number of rental vacancies available, combined with strong demand for such properties, could tempt landlords to increase their rents even more.
However, housing experts are advising landlords against doing so, saying that any further hikes would overburden tenants, many of whom are already struggling to keep up with the costs.
The largest landlord of single-family rental homes in the U.S., Invitation Homes and Tricon American Homes, said its occupancy rates have remained above 95 percent during the last three years.
“Rent growth rates continue to be solid in most of the major markets across the country—in the middle to upper single digits,” Daren Blomquist, senior vice president at ATTOM Data Solutions, told the National Real Estate Investor.
ATTOM’s data shows that the rental costs for three-bedroom units have risen by 7 percent in Los Angeles, and by 5 percent in Philadelphia, in the 12 month period ending March 2018.
But analysts say landlords should consider holding off on rising their rents any more. The Harvard Joint Center for Housing Studies says almost half of all U.S. renters – approximately 30 million households – are already shelling out more than 30 percent of their incomes on rent. As such, those households are defined as “cost-burdened” by financial experts.
As tight inventory supplies continue to push home values up, some economists have been calling on landlords to cash out some of the equity they’ve built up and put their properties back on the market to meet the need for homes at a lower price point.
But many landlords seem to have little intention of selling off their properties. For instance, Invitation Homes, which owns around 80,000 homes in 17 U.S. markets, recently told CNBC the rental business is highly profitable.
“U.S. housing is one of the most liquid classes in the world, and it’s a very easy thing for us on the margin to be buying and selling with our portfolio today,” Dallas Tanner, chief investment officer for Invitation Homes, told CNBC.
The single-family rental market is very healthy right now, says John Pawlowski, an analyst at Green Street Advisors. “The demand versus supply balance, and the operating outlook for revenue growth over these coming years, is more favorable versus most property types,” Pawlowski said.