As residents of the Houston area continue to reel from rising sale prices for single-family homes, some are pursuing a more attractive alternative: single-family home rentals. But a new study indicates that even those are getting more expensive.
In the Houston-The Woodlands-Sugar Land area, rents for single-family homes rose 1.2 percent from April 2018 to April 2019, according to the study, produced by CoreLogic.
“While the housing market is cooling, home prices remain high in some of the nation’s top metros. This may be contributing to the growing rental demand, as many potential buyers are being priced out of the market,” Molly Boesel, principal economist at CoreLogic, says in a release.
CoreLogic analyzed changes in single-family rents across the U.S. as a whole and in 20 metro areas, including Houston. In Austin, single-family rental rates grew 3.5 percent from April 2018 to April 2019, according to CoreLogic, while the growth rate was 2.5 percent in the Dallas area. San Antonio was not included in the study.
Although percentage increases for April 2019 were available, the dollar amounts for single-family rents were not. Dollar amounts for March 2019, however, were available. In the Houston area, the median rent for a three-bedroom, single-family home was $1,408, according to CoreLogic, less expensive than Austin ($1,548) and Dallas ($1,622).
Among the 20 metro areas examined by CoreLogic, Phoenix posted the highest year-over-year increase in rents for single-family homes — 6.9 percent.
CoreLogic, a provider of property data, services, and technology, says low inventories of single-family home rentals are driving up rental rates around the country. “Metro areas with limited new construction, low rental vacancies, and strong local economies that attract new employees tend to have stronger rent growth,” the company says.
The Houston Association of Realtors recently reported that the median price of a single-family home in the greater Houston housing market rose was $249,993 in May 2019, a 2.4 percent increase from May 2018. In that same period, the average home price increased 5.8 percent to $323,023, according to the association.
Amid that atmosphere, some residents of the Houston area are turning to single-family home rentals, because those require less of an upfront financial commitment than home purchases. One reason? When you rent a home, there’s no down payment (a 20 percent down payment equates to around $50,000 for the median-priced home in the Houston area). Another reason? Buying a home normally results in thousands of dollars in mortgage-related fees.