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Investment returns for single-family rental homes are expected to rise in 2024, supported by rent prices that are rising faster than home prices nationwide.
The average annual gross rental yield for a three-bedroom home is projected to be 7.55% in 2024, up from an average of 7.39% in the same market in 2023. This is according to the US 2024 Q1 report. atom.
From 2023 to 2024, the median three-bedroom rent rose faster than the median single-family home price in 216 of the 341 counties analyzed (63%).
“The U.S. home sales market cooled significantly last year, with the weakest growth in a decade,” ATTOM CEO Rob Barber said in a news release. “However, it may not have provided enough demand to make housing affordable for most workers and may have provided enough demand to drive up rents and yields for investors who rent single-family properties.”
Indian River County, Florida (located in the Sebastian Vero Beach metropolitan area) and St. Louis, Missouri, are expected to have the highest annual gross rental yields for three-bedroom properties in 2024, at 14.6%.
It was followed by Cameron County in the Brownsville-Harlingen metropolitan area, Texas (13.2%). Monroe County, New York, Rochester metropolitan area (12.8%). and Richmond County, Georgia, Augusta-Richmond County metropolitan area (12.7%).
Meanwhile, California’s Santa Clara County, located in the San Jose metropolitan area, is expected to have the lowest potential annual gross return in 2024 at 3%. This was followed by San Mateo County (3.4%) in the neighboring San Francisco metropolitan area. Arlington County, Virginia, Washington, DC metropolitan area (3.8%); Williamson County, Tennessee, Greater Nashville (3.9%). and San Francisco County, California (3.9%).
A total of 28 counties were identified where a three-bedroom property could have a gross annual rental yield of more than 10%. These include Cook County, Illinois; Wayne County, Michigan. Cuyahoga County, Ohio. Allegheny County, Pennsylvania. and Shelby County, Tennessee.
The report analyzed single-family rental returns in U.S. counties with populations of 100,000 or more with sufficient rent and home price data.
The report incorporates median rents and median home prices from national real estate databases, as well as ATTOM licensed and publicly recorded sales deed data.
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