Escolar Documentos
Profissional Documentos
Cultura Documentos
Single-Family Rental
Research Report
To Our Valued Clients,
We are pleased to present our 2017 Single-Family Rental Report to help guide your successful real estate investment strategy this
year. In this report, we share the results of our extensive research on major markets, economic conditions, and other factors that
influence the balance of risk versus reward on single-family rentals across the country. Were condent that the right single-family
investment assets are available for you, regardless of your nancial goals.
Historically low interest rates in 2016 enabled investors to acquire cash-owing properties with leverage in metros across most of
the country despite the continued volatility in the stock market. Strong rental growth in many markets, combined with an ongoing
preference among the U.S. population for rental living pushed vacancies down, while appreciation outpaced ination.
The outlook remains positive for 2017, although rent growth in some major coastal markets will be subdued relative to last years
levels. Elsewhere, supply and demand for rental properties nationwide will result in another solid year for investors. The economic
recovery will continue to generate hundreds of thousands of new households this year, creating an unprecedented demand for
single-family rentals, especially as single-family construction levels remain tempered compared to boom periods.
The Fed will likely raise interest rates throughout the year in an effort to normalize monetary policy. By the end of 2017, we expect
interest rates to climb approximately 75 basis points, but remain relatively low. Inationary concerns that arose when the new
President took office will place upward pressure on 10-Year Treasuries. To take advantage of healthy conditions, we believe ac-
quiring properties during the rst half of the year would protect your existing portfolio and help build wealth over the long term.
Sincerely,
Stephen Hovland
Director of Research and Communications
Table of Contents
National Overviews
Single-Family Rankings4-5
National Economic Overview 6
National Single-Family Overview7
National Single-Family Investment Overview8
Capital Markets Overview 9
Local Overviews
Atlanta10
Austin 11
Boston ..........12
Charlotte .................................................................................................................................................................................................................... 13
Chicago 14
Cleveland 15
Columbia .....................................................................................................................................................................................................................16
Dallas/Fort Worth 17
Denver .........................................................................................................................................................................................................................18
Detroit. .........................................................................................................................................................................................................................19
Houston20
Indianapolis .............................................................................................................................................................................................................. 21
Inland Empire ........................................................................................................................................................................................................... 22
Jacksonville 23
Las Vegas 24
Los Angeles ............................................................................................................................................................................................................. 25
Memphis26
Miami ..........................................................................................................................................................................................................................27
Oakland28
Orange County..........................................................................................................................................................................................................29
Orlando ......................................................................................................................................................................................................................30
Phoenix ......................................................................................................................................................................................................................31
Portland ..................................................................................................................................................................................................................... 32
Raleigh-Durham 33
San Antonio .............................................................................................................................................................................................................. 34
San Diego ..................................................................................................................................................................................................................35
San Francisco ...........................................................................................................................................................................................................36
San Jose ....................................................................................................................................................................................................................37
Seattle ........................................................................................................................................................................................................................38
Tampa 39
Investor Information
Research Services and Investment Locations40
Contacts 41
Single-Family Rankings
$425 3% the top five are Las Vegas and Chicago, metros that were
JOB GROWTH
latecomers to the economic recovery. Opportunities have also
$300 2% arisen for savvy investors in two California markets Oakland
and San Diego. While both metros feature high median
$175 1%
home prices relative to the other metros on this list, their
expanding economies ensure solid long-term appreciation
$50 0%
a
s
do ttle ega cago Diego land troit llas phi
s as prospects for strong rent growth remain intact. High rental
ant Orlan Sea as V i Oa
k De Da Mem
Atl L Ch San yields and low prices propelled Detroit and Memphis into
MARKET the top 10, while a well-rounded economy featuring a large
financial services presence enabled Dallas to secure a spot.
High-Demand Ranking
MSA Rank HIGH-DEMAND RANKING
Seattle 1 The Strongest Rental Demand Ranking looks at metros with
Oakland 2
the most favorable supply/demand forecasts regardless
San Diego 3
Orlando 4 of projected returns in 2017. These markets boast strong
Las Vegas 5 job growth, low vacancy, high projected rent gains and
Los Angeles 6 limited threat from renters purchasing high-priced homes.
Atlanta 7 Furthermore, the number of jobs per newly issued permit
Boston 8 is considered to serve as a hedge against the prospect of
Austin 9
overbuilding.
Raleigh 10
Major California port cities with growing infrastructure for the
trade, transportation and utilities sector, earned prominent
HIGH-DEMAND MARKETS mentions on this list. These metros Oakland, San Diego and
8%
2017 VACANCY FORECAST 2017 RENT GROWTH FORECAST 8% Los Angeles along with the top metro of Seattle have among
6%
the strongest job markets in the country, and the highest rent
6% growth forecasts this year. Increasingly out-of-reach prices
RENT GROWTH
VACANCY
MARKET
4
Single-Family Rankings
CAP RATE
high foreclosure levels to emerge as strong markets for 6% 10%
of many of these metros are outperforming the nation as a PRICE DECLINE 40%
DECLINE FROM PRIOR PEAK
5
National Economic Overview
UNEMPLOYMENT RATE
peak to trough, including nearly 30,000 oil and gas extraction
3 8%
positions. Unimpeded by the energy sector, the U.S. economy
0 6%
managed to add 2.2 million positions last year.
$120 rate since 1994. At the beginning of the most recent recession,
JOBS (OOOS)
-12
$60 2017 ECONOMIC OUTLOOK
GDP is anticipated to grow 2.5 percent during in 2017. The
-20 $30
08 10 12 14 16
momentum gained in the second half of last year will help
the national economy expand at the fastest pace since 2015.
YEAR
Consumer spending related to household formation will be
one of the primary catalysts of a stronger economy.
MEDIAN HOME PRICE VS. CONSUMER CONFIDENCE
After slipping to 1.5 percent during 2016, payroll expansion
$225 MEDIAN HOME PRICE CONSUMER CONFIDENCE 125
is projected to rise to 1.7 percent this year. Employers are
MEDIAN HOME PRICE (000S)
CONSUMER CONFIDENCE
6
National Single-Family Overview
CLASS A SECTOR
900
The national SFR market will remain healthy in 2017, though
UNITS (000S)
increased competition from a wave of new apartments will
600
slow the pace of improvement. Nonetheless, vacancy will
continue to tighten on a national basis, reaching the lowest 300
level of the current cycle. According to recent data available
from the U.S. Census Bureau, 805,000 households were 0
formed in 2016. Of those, 434,000 were renter households. 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Strong job growth will encourage new household formation, *Through 3Q YEAR
particularly among millennials that have been living with their
parents. As most of these new households are unlikely to
HOUSING STARTS
enter the ownership pool, this will create demand for rental
2500
properties. Additionally, higher home prices, limited inventory,
debt burdens and rising interest rates will limit the number 1875
of first-time homebuyers to approximately 35 percent of the
market, well below the long-term trend of 40 percent. 1250
$1,000
Competition will limit rent gains. Asking rent growth will slow
to 3.5 percent in 2017. Some of the markets with previously 8%
$500
strong performance are expected to show evidence of
plateauing rents this year.
$0 6%
09 10 11 12 13 14 15 16 17*
*Forecast YEAR
7
National Investment Overview
YEAR-OVER-YEAR CHANGE
turnaround in the equities markets was almost immediate
$150 10%
and resulted in a two-month rally. Although the stock market
$100 0%
recently reached an all-time high, concerns about the ongoing
strength of the current bull market pushed capital into rental
$50 -10% assets.
8
Capital Markets Overview
FED ACTIONS EXPECTED TO INCREASE CAPITAL FEDERAL FUNDS RATE VS. 30-YEAR MORTGAGE
COSTS FOR REAL ESTATE 8% FEDERAL FUNDS RATE 30-YEAR MORTGAGE
9
ATLANTA Employment: 2.8% Vacancy: 120 bps Rents: 3.5%
16
next five to ten years.
VACANCY
YEAR-OVER-YEAR CHANGE
$65 12% Vacancy: SFR vacancy is forecast to end 2017 at 5.1 percent,
down 120 basis points annually.
$60 0%
Rent: Rent growth is forecast at 3.5 percent, leaving year-
end asking rents at $1,323 per month.
$55 -12%
10
AUSTIN Employment: 3.6% Vacancy: 80 bps Rents: 2.0%
YEAR-OVER-YEAR CHANGE
3%
Austin employment continues to expand at a blistering pace,
with 36,000 new positions expected to be added in 2017,
0%
representing a 3.6 percent growth. The professional and
business services sector will fuel the local economy, led by
-3%
high-tech and Internet-based companies. Internet-based job
search engine Indeed plans to add 1,000 new jobs to the metro -6%
between now and 2019. Korea-based Samsung, meanwhile, 09 10 11 12 13 14 15 16 17*
has announced a $1 billion plan to expand its mobile chip *Forecast YEAR
division, resulting in 500 direct jobs beginning in early 2017,
while video game developer Certain Affinity will add 300 new
PERMITS
jobs to the market between the end of the year and 2020.
15 SINGLE-FAMILY MULTIFAMILY
Other growing employment sectors in Austin are information
and financial activities, and education and health services.
UNITS (000S)
10
Institutional buyers have largely exited the SFR market in
Austin, allowing retail investors a chance to reap the benefits
of this high-demand, growing market. Investors drawn to 5
this Texas metro are targeting properties desired by young
families in the technology and Internet space, while traditional
0
home buyers are facing higher home prices. Furthermore,
08 09 10 11 12 13 14 15 16*
Austin investment sales are growing while owner-occupied
*Annualized 3Q 2016 YEAR
sales are softening, as first-time buyers are being priced out of
the market. Cap rates in this market have remained at a steady
4.7 percent for the past two years. In markets like Austin where VACANCY & RENT
investment prices have increased, most investors have opted $1,900 SFR RENT VACANCY 20%
to use leverage.
$1,700 15%
MONTHLY RENT
MARKET OUTLOOK
VACANCY
Employment: Payroll levels are expected to expand to 3.6 $1,500 10%
3.9 percent.
Rent: By year-end, asking rents are forecast to reach $1,735 INVESTMENT HOME PRICE TRENDS
per month, up 2.0 percent for the year. In 2016, SFR rents $150 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24%
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
11
BOSTON Employment: 2.1% Vacancy: 70 bps Rents: 2.9%
VACANCY
YEAR-OVER-YEAR CHANGE
$160 0%
Rent: Asking rents are expected to increase 2.9 percent to
$2,537 per month in 2017.
$150 -12% Investment: While both single- and multifamily vacancy rates
remain very tight, entry prices exceed $300,000, rendering
$140 -24% first-year returns inconsequential. Investors seeking higher
09 10 11 12 13 14 15 16*
yields are eschewing this metro in favor of markets with
*Through 3Q 2016 YEAR
stronger gains.
12
CHARLOTTE Employment: 2.5% Vacancy: 70 bps Rents: 3.8%
YEAR-OVER-YEAR CHANGE
The Charlotte economy is poised to outperform the nation,
with the projected addition of 29,000 new jobs in 2017, 3%
UNITS (000S)
Cash buyers continue to favor Charlotte properties, with 67 6
VACANCY
at 7.1 percent due to higher rents, making Charlotte a strong
$1,100 10%
market for investors seeking above-average returns.
YEAR-OVER-YEAR CHANGE
Rent: Rents are forecast to grow 3.8 percent to $1,239 per $80 10%
13
CHICAGO Employment: 1.2% Vacancy: 90 bps Rents: 1.9%
VACANCY
MARKET OUTLOOK
$1,200 4%
Employment: Chicago employment is expected to continue
its steady growth with an expansion of 1.2 percent over
$1,000 0%
09 10 11 12 13 14 15 16 17*
2016 levels. This year 54,000 new jobs are expected. Last
*Forecast
year, 48,000 new positions were added.
YEAR
YEAR-OVER-YEAR CHANGE
YEAR-OVER-YEAR CHANGE
A latecomer to the recovery, Northeast Ohios economy
continues to gain momentum as it transitions from a 3%
UNITS (000S)
2
VACANCY
the regions transactions were closed by these buyers. With
$1,100 8%
elevated yields, many suburban and in-city neighborhoods
remain attractive to SFR investors seeking strong cash flow in
$1,000 4%
lieu of appreciation.
YEAR-OVER-YEAR CHANGE
Rent: Asking rents for single-family rents are expected to $55 10%
VACANCY
$0 0%
Employment: After adding 6,500 jobs in 2016, employment
10 11 12 13 14 15 16 17*
growth has slowed slightly in Columbia. In 2017, 6,000 new
*Forecast
positions are forecast, representing a 1.5 percent growth for
YEAR
the year.
YEAR-OVER-YEAR CHANGE
$50 0%
Rent: Rents are anticipated to grow to $1,150 per month in
2017, up 1.6 percent from year-end last year.
$40 -12% Investment: Though Columbia has lower vacancy than the
national average and cap rates above 9 percent, investors
$30 -24% are seeking markets with stronger job growth and less
10 11 12 13 14 15 16
competition from traditional buyers.
*Through 3Q 2016 YEAR
16
DALLAS/FORT WORTH Employment: 2.9% Vacancy: 30 bps Rents: 3.5%
YEAR-OVER-YEAR CHANGE
A nearly 3 percent increase in jobs in 2017 is expected for
Dallas/Fort Worth as 105,000 new positions are created. 3%
UNITS (000S)
15
As the foreclosure stock continues to dry up, institutional
investors are beginning to leave Dallas/Fort Worth. Sale prices 10
VACANCY
movement is unanticipated due to higher interest rates. $900 8%
YEAR-OVER-YEAR CHANGE
17
DENVER Employment: 3.3% Vacancy: 30 bps Rents: 1.6%
move marks a shift away from a single U.S. energy hub, with
6
the potential for more energy sector companies moving to the
4 Rocky Mountain region in the coming years.
VACANCY
MARKET OUTLOOK
$0 2%
08 09 10 11 12 13 14 15 16 17* Employment: Payroll gains are anticipated to outperform
*Forecast YEAR
national levels as payrolls expand 3.3 percent. In 2017,
48,000 new jobs are forecast. Last year, the metro also
added 48,000 positions.
INVESTMENT HOME PRICE TRENDS
$250 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24% Vacancy: After a 20-basis point rise in 2016, vacancy at
single-family rentals is expected to dip 30 basis points to
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
$150 8%
Rent: Single-family rents in this market are expected to inch
up to $2,097 per month, a 1.6 percent increase over 2016.
$100 0% Investment: Though this market has job growth that exceeds
national levels, investment prices are well over $300,000
$50 -8%
and cap rates linger just above 4 percent, encouraging
09 10 11 12 13 14 15 16*
investors to seek higher yields elsewhere.
*Through 3Q 2016 YEAR
18
DETROIT Employment: 2.1% Vacancy: 150 bps Rents: 2.7%
YEAR-OVER-YEAR CHANGE
A renaissance in Downtown Detroit will continue to bolster
the local economy in 2017. Last year, metro employers added 4%
UNITS (000S)
tight market by national standards. Rent growth remained in 4
the 4.0 to 4.5 percent range over the past two years, but will
slow to 2.7 percent by years end. 2
Investors have fueled the local housing market over the past
0
five years, creating a lack of for-sale inventory in the Detroit
08 09 10 11 12 13 14 15 16*
area. Single-family rental sales account for a significant share
*Annualized 3Q 2016 YEAR
of transactions in the market. As a result, owner-occupied
median home price and investment prices are virtually in lock
step. If buyers can find and procure single-family rentals in VACANCY & RENT
this market, they will benefit from low entry prices, relative to $1,200 SFR RENT VACANCY 18%
VACANCY
70 basis points year-over-year since 2015, they remain high at
$1,000 10%
6.7 percent, presenting excellent upside potential for investors.
SFR investors in search of solid yields and strong renter
$900 6%
demand should capitalize on rapidly improving downtown
submarkets such as Midtown, East Riverfront and Corktown.
$800 2%
09 10 11 12 13 14 15 16 17*
MARKET OUTLOOK
*Forecast YEAR
Employment: Auto manufacturers will help create 16,000
jobs this year, lifting payrolls 2.1 percent.
INVESTMENT HOME PRICE TRENDS
Vacancy: Low construction levels should support a forecast $120 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 21%
150 basis point decrease in vacancy to 4.3 percent.
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
Rent: Average rents are projected to rise 2.7 percent in 2017 $90 14%
19
HOUSTON Employment: 1.3% Vacancy: 130 bps Rents: -0.4%
HOUSTON MARKET
3%
While year-over-year growth does not outpace national
levels, the Houston employment sector is recovering, with
0%
the addition of 40,000 jobs, or 1.3 percent growth forecast for
-3%
2017. Employment dropped over the last few years due to the
instability of the energy sector, but it is expected to resume
-6%
an upward trajectory this year. Phillips 66 moved into its new
09 10 11 12 13 14 15 16 17* 1.1 million-square-foot headquarters located off Beltway 8 in
*Forecast YEAR Westchase. The Fortune 500 company took up occupancy of
two Class A office towers in mid-2016. Trade, transportation
and utilities, as well as professional and business services
PERMITS
are two other major employment sectors, with the former
40 SINGLE-FAMILY MULTIFAMILY
exhibiting a continued expansion. Vacancy will decline 130
30
basis points to 7.3 percent, a decade-low number for the
UNITS (000S)
VACANCY
YEAR-OVER-YEAR CHANGE
$60 0%
Rent: Rents are anticipated to decline slightly this year. Year-
end rents in 2017 are expected to be $1,591 per month. Last
$40 -8%
year, rents were $1,598 per month at the end of the year.
YEAR-OVER-YEAR CHANGE
3%
In 2017, the employment market in Indianapolis is expected
to gain 9,000 jobs, a nearly 1 percent gain from last year.
0%
While solid, this represents a slight slowing of growth in this
metro, as approximately 14,200 jobs were created in 2016.
-3%
Nonetheless, trade transportation and utilities, education
and health services, and government continue to make up -6%
the largest sectors in the local economy. Among the notable 09 10 11 12 13 14 15 16 17*
expansions in the healthcare space, TriMedX, a healthcare *Forecast YEAR
technology company, is planning on adding 100 new jobs
to the region in the coming years following a $21.5 million
PERMITS
expansion. Meanwhile, Cook Group Inc., a Bloomington-based
8 SINGLE-FAMILY MULTIFAMILY
medical research firm which will infuse $16.5 million into its
business and hire 82 high-paying jobs in the next five years.
6
Other expansions include Pittsburgh-based GetGo Caf +
UNITS (000S)
Market adding 150 jobs in the metro; and student loan officer, 4
Sallie Mae, who will add nearly 300 jobs to the region by 2018.
are being pushed farther out into the suburbs to capture the
0
same high cap rates. At the same time, entry prices are below
08 09 10 11 12 13 14 15 16*
$100,000 and investors are split evenly between cash and
*Annualized 3Q 2016 YEAR
leveraged transactions. With declining vacancy rates market-
wide, healthy rent growth, and cap rates at nearly 8 percent,
Indianapolis presents an opportunity for investors with long VACANCY & RENT
investment horizons. A relatively modest pace of appreciation $1,200 SFR RENT VACANCY 16%
VACANCY
demand for single-family properties, builders have pulled an
$1,000 8%
increased number of single-family permits over the last four
years. Nonetheless, renter demand has remained sufficient to
$900 4%
pull vacancy lower, benefiting local investors.
YEAR-OVER-YEAR CHANGE
21
INLAND EMPIRE Employment: 1.8% Vacancy: 70 bps Rents: 2.3%
3%
A diverse economy continues to bolster the Riverside-San
Bernardino rental market. In 2016, employers added 23,000
0%
jobs, marking growth of nearly 1.5 percent. Continued
expansion will occur across many sectors of the Inland
-3%
Empire economy in 2017, supporting the addition of 25,000
-6%
jobs. A federal training program called TechHire, designed to
09 10 11 12 13 14 15 16 17* bring more STEM jobs to the region, now includes Riverside.
*Forecast YEAR TechHire has committed 4,000 people to technology jobs over
the next five years in such industries such as data analytics,
healthcare IT, cyber-security and robotics. The warehouse
PERMITS
sector continues to improve, highlighted by a spate of recent
10 SINGLE-FAMILY MULTIFAMILY
real estate projects and leases. Builders brought nearly 10
8 million square feet of warehouse space online during the
second quarter of 2016. Amazon, QVC and UPS are among
UNITS (000S)
6
the firms that have commenced build-to-suit projects or inked
4 major leases for warehouse or distribution space in the region.
2 With low investment home prices and high cap rates relative
to other major California metros, the Riverside-San Bernardino
0
area remains one of the most attractive in the state for SFR
08 09 10 11 12 13 14 15 16*
investing. In fact, investment home price growth skyrocketed
*Annualized 3Q 2016 YEAR
10.8 percent in 2016, reaching $277,000, and cap rates
remained steady for the past three years, moving only 10
VACANCY & RENT basis points to 4.5 percent in 2016. An increase in multifamily
$1,800 SFR RENT VACANCY 12% construction will assist in moderating rents for both SFRs and
apartments. Rent growth in the Inland Empire soared over the
$1,350 10% past three years growing 8.6 percent in 2016 but will drop
MONTHLY RENT
VACANCY
MARKET OUTLOOK
$450 6%
Employment: This year, 25,000 jobs are projected to be
added, a gain of 1.8 percent. Last year, 23,000 new positions
$0 4%
09 10 11 12 13 14 15 16 17*
were created.
*Forecast YEAR Vacancy: Vacancy for single-family rentals is anticipated to
tighten by 70 basis points to 5.3 percent this year.
INVESTMENT HOME PRICE TRENDS Rent: A 2.3 percent year-over-year gain in rents is expected
$200 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24% in the Inland Empire. Average rents are anticipated to close
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
22
JACKSONVILLE Employment: 3.4% Vacancy: 90 bps Rents: 2.0%
YEAR-OVER-YEAR CHANGE
The Jacksonville employment market will outpace average
3%
growth both nationally and across Florida. This year, 23,000
new jobs are projected, representing a 3.4 percent gain
0%
annually. Major sectors contributing the regions economic
strength include trade, transportation and utilities, business
-3%
and professional services, and leisure and hospitality. Amazon,
for example, announced plans to develop distribution and -6%
fulfillment centers that will create 2,700 jobs upon opening 09 10 11 12 13 14 15 16 17*
in late 2017. Human Resources software company Randrr is *Forecast YEAR
another presence expanding to Jacksonville. The startup
will invest $9 million to create 200 skilled positions over
PERMITS
the next two years, paying an average salary of $200,000.
8 SINGLE-FAMILY MULTIFAMILY
Median single-family rents are projected to grow 2 percent
over last year, while permits for single-family properties will
6
also increase to meet demand. Multifamily permit issuance
UNITS (000S)
has declined due to elevated levels of existing supply and an 4
increase in vacancy.
VACANCY
uptick in single-family construction, investors may need to be
$700 12%
cautious of competing with the for-sale market.
YEAR-OVER-YEAR CHANGE
23
LAS VEGAS Employment: 2.7% Vacancy: 150 bps Rents: 3.1%
12%
VACANCY
MARKET OUTLOOK
$400 6%
Employment: Though late to the recovery, Las Vegas is
$0 3%
expected to add 25,000 new positions to the economy this
09 10 11 12 13 14 15 16 17* year. Last year, 20,000 jobs were created.
*Forecast YEAR Vacancy: Job growth should contribute to a decline in the
vacancy rate. By the end of the year, levels are expected
INVESTMENT HOME PRICE TRENDS to drop to 4.6 percent, down 150 basis points for the year.
$120 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 30%
Rent: Operators in Las Vegas are expected to grow average
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
24
LOS ANGELES Employment: 2.1% Vacancy: 10 bps Rents: 3.8%
YEAR-OVER-YEAR CHANGE
Employment conditions in L.A. County remain among the
3%
strongest in the state. Job growth will expand 2.1 percent in
2017, with the addition of 90,000 new jobs. The largest sector
0%
trade, transportation and utilities will keep growing this
year to bolster the Port of Long Beachs labor requirements
-3%
and other infrastructure projects. Phase one of the $1.3
billion Middle Harbor Terminal wrapped up in late 2015. Upon -6%
completion in 2019, the port will be redeveloped into the 09 10 11 12 13 14 15 16 17*
greenest, most technologically advanced container terminal *Forecast YEAR
in the world. Another major project rising in L.A. is the Los
Angeles Stadium and Entertainment District at Hollywood Park
PERMITS
in Inglewood. In 2019, the stadium will house the L.A. Rams
20 SINGLE-FAMILY MULTIFAMILY
and L.A. Chargers, and give the city greater leverage in its bid
for the 2024 Olympics. L.A. rent growth soared 6.6 percent
15
year-over-year in 2016 to $2,550 per month, and will continue
UNITS (000S)
to grow in 2017, although not as frenetically. Vacancies will 10
tighten 10 basis points in 2017 to a decade-low 2.9 percent.
VACANCY
Adams and Jefferson Park neighborhoods, also located in
$2,000 4%
south central L.A., for SFR yields. Meanwhile, Highland Park,
Glassel Park, and Montecito Heights in northeast L.A. provide
$1,500 2%
investors with solid opportunities for appreciation.
Vacancy: One of the tightest markets in the country, Los INVESTMENT HOME PRICE TRENDS
Angeles vacancy is anticipated to drop to 2.9 percent, $400 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 30%
down 10 basis points from last year.
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
Rent: Single-family home rents in the Los Angeles metro are $300 20%
VACANCY
YEAR-OVER-YEAR CHANGE
$1,058 per month this year. In 2016, the year ended with
$55 5%
rents at $1,040 per month.
$50 0% Investment: High yields and low entry prices will attract out-
of-state investors to Memphis in 2017. As prices elsewhere
$45 -5% mean fewer single-family deals pencil out, more investors
will consider this market in the coming months.
$40 -10%
09 10 11 12 13 14 15 16*
*Through 3Q 2016 YEAR
26
MIAMI Employment: 1.9% Vacancy: 20 bps Rents: 2.0%
YEAR-OVER-YEAR CHANGE
As South Floridas high-priced housing market starts to cool,
3%
demand for single-family and multifamily rentals will remain
strong, fueled by positively trending economic growth. Even
0%
though developers brought a glut of new condo projects
online over the past two years, home prices remain out of
-3%
reach for many buyers. As the luxury condo sector feels the
impacts of oversupply, both monthly multifamily and single- -6%
family rents will rise, while vacancies are on track to decline. 09 10 11 12 13 14 15 16 17*
Last year, builders issued a total of 9,200 residential permits. *Forecast YEAR
Miamis payrolls are expected to expand 1.9 percent in 2017.
Last year, regional employers added 19,600 positions to the
PERMITS
metro, with the greatest growth in the leisure and hospitality,
12 SINGLE-FAMILY MULTIFAMILY
and professional and business services sectors. Financial
services giant Wells Fargo signed the biggest lease in Miami
9
last year: a $32 million relocation and expansion at Wells
UNITS (000S)
Fargo Center, a Class A office tower located downtown. 6
VACANCY
and local investors, out-of-state buyers from such locales as
$1,800 10%
the Bay Area or New York City may target acquisitions that
offer both healthy yields and modest appreciation relative
$1,500 5%
to coastal housing markets. Furthermore, competition for
investment housing will decline as institutional buyers
$1,200 0%
continue their exodus from the region, giving retail investors 09 10 11 12 13 14 15 16 17*
the upper hand in Miami. *Forecast YEAR
MARKET OUTLOOK
Employment: Employers in Miami are expected to increase INVESTMENT HOME PRICE TRENDS
$160 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24%
employment in the metro by 1.9 percent, or 22,000 jobs.
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
EMPLOYMENT TRENDS
METRO US
CORPORATE RELOCATIONS, PORT OF OAKLAND
6%
EXPANSION DRIVE RENT GROWTH IN EAST BAY
YEAR-OVER-YEAR CHANGE
3%
The East Bay continues to welcome corporations relocating
from higher-priced offices in San Francisco and the Silicon
0% Valley. Although overall job growth slowed in 2016 to 2.8
percent, regional employers are expected to add more positions
-3% in 2017, pushing employment growth to 2.9 percent. The
largest contributor to the economy is the trade, transportation
-6% and utilities sector, bolstered by the Port of Oakland. The port
09 10 11 12 13 14 15 16 17*
recently opened a new shipping route between China and
*Forecast YEAR
Vietnam last year, and commenced build-outs to its container
terminal that will accommodate mega ships. The professional
PERMITS and business services sector keeps growing as tech firms and
4 SINGLE-FAMILY MULTIFAMILY other companies head east across the Bay Bridge. Uber plans
to move into Oaklands 330,000-square foot Uptown Station
3 in 2017, while Makani Power, a subsidiary of Google, plans to
UNITS (000S)
$1,600 4%
investors with the ability to earn solid yields, while Alameda,
Livermore and San Leandro offer longer-term appreciation
$800 2% opportunities.
$0 0%
MARKET OUTLOOK
09 10 11 12 13 14 15 16 17* Employment: In 2017, 33,000 positions are expected to be
*Forecast YEAR added after 31,000 additional spots were created last year.
New positions represent a 2.9 percent rise in payrolls.
INVESTMENT HOME PRICE TRENDS Vacancy: Oakland vacancies will tighten slightly this year. In
$400 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 36% 2016, market wide vacancy for single-family rentals was 3.5
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
YEAR-OVER-YEAR CHANGE
Orange County employers plan to keep hiring in 2017, adding
3%
another layer of robustness to the economy. New positions
are expected to total 34,000, a 2.1 percent increase for the 0%
year. The high-paying professional and business services
sector remains the biggest contributor to Orange Countys -3%
economic engine. Indicative of the regions ongoing growth,
the construction sector expanded at the highest rate of all -6%
2016. Commercial projects will rise with the influx of new *Forecast YEAR
UNITS (000S)
and indoor and outdoor shops. Rent growth of 5.8 percent in
Orange County reached an eight-year high in 2015, pinnacling 4
VACANCY
marking a five-year low. The number of retail homebuyers also
$2,600 4%
declined annually since 2015. For investors seeking strong
appreciation, SFRs in the coastal communities of Huntington $2,100 2%
Beach and Costa Mesa offer stable renter pools, while inland
buyers may find higher returns in Tustin and Yorba Linda. $1,600 0%
09 10 11 12 13 14 15 16 17*
MARKET OUTLOOK *Forecast YEAR
Employment: Payrolls are forecast to expand 2.1 percent in
2017, as 34,000 new jobs are created in Orange County.
INVESTMENT HOME PRICE TRENDS
Last year, employers added 38,000 spots.
$400 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 30%
YEAR-OVER-YEAR CHANGE
Rent: Asking rents for SFRs in Orange County are projected $300 0%
to expand by 2.8 percent to $3,202 by the end of 2017.
29
ORLANDO Employment: 3.2% Vacancy: 300 bps Rents: 3.5%
VACANCY
MARKET OUTLOOK
$0
09 10 11 12 13 14 15 16 17*
0%
Employment: The pace of employment growth in Orlando is
*Forecast YEAR
forecast at 3.2 percent as employers add 39,000 positions.
YEAR-OVER-YEAR CHANGE
30
PHOENIX Employment: 2.4% Vacancy: 40 bps Rents: 2.5%
YEAR-OVER-YEAR CHANGE
The Phoenix job engine is performing well, supporting demand
4%
for rental units across the Valley. Construction employment
has been a standout sector over the past year, expanding by
0%
nearly 10 percent in 2016. A mix of residential and commercial
projects are fueling the rise in development jobs, a trend that
-4%
is expected to continue. At the end of last year, more than
11,000 multifamily rental units were underway, most of which -8%
will be completed this year. As rental construction peaks in 09 10 11 12 13 14 15 16 17*
2017, single-family landlords will compete with a wave of new, *Forecast YEAR
Class A apartments. As a result, single-family vacancy will tick
higher while rent growth abates. Nonetheless, the long-term
PERMITS
prospects for the market remain positive due to the areas
16 SINGLE-FAMILY MULTIFAMILY
healthy economic picture. For instance, Farmers Insurance
is considering an expansion that will create 1,000 jobs in the
12
market, joining State Farm who is in the process of adding
UNITS (000S)
8,000 Phoenix jobs. 8
VACANCY
returns, should look to emerging markets like Sunnyslope and
$700 12%
Northeast Phoenix, while older neighborhoods in Scottsdale
and Tempe continue to appreciate in value over the long term.
$350 8%
MARKET OUTLOOK
Employment: Payrolls are forecast to jump 2.4 percent this $0
09 10 11 12 13 14 15 16 17*
4%
YEAR-OVER-YEAR CHANGE
31
PORTLAND Employment: 2.5% Vacancy: 60 bps Rents: 3.2%
4
policy and capital with respect to clean technology and green
practices. Despite builders responding to the pent-up demand
2
for housing units by expanding overall inventory, rent growth
in this market is still strong, achieving a 3.2 percent expansion
0 this year. In fact, rent growth has been sliced in half each year
08 09 10 11 12 13 14 15 16* since 2015 when it skyrocketed 12.8 percent.
*Annualized 3Q 2016 YEAR
Strong renter demand in Portland will bode well for SFR
investors with the financial wherewithal to acquire properties
VACANCY & RENT in the area. Year-over-year investment home prices soared 8
$2,000 SFR RENT VACANCY 6% percent in 2016 to $300,000, while cap rates have remained
in the low 4-percent-range for the past nine years. Investment
$1,600 5% sales comprise more than one-fifth of the areas housing
MONTHLY RENT
VACANCY
YEAR-OVER-YEAR CHANGE
$175 12% to 5.5 percent in 2017. In 2016, levels were at 4.9 percent.
$150 0%
Rent: Portland is expected to experience solid single-family
rent growth this year. In 2017, rents are forecast to grow 3.2
percent to $1,902 per month.
$125 -12%
32
RALEIGH-DURHAM Employment: 2.4% Vacancy: 130 bps Rents: 2.7%
YEAR-OVER-YEAR CHANGE
The largest employment sectors in the Raleigh-Durham
3%
investment market are the professional and business services,
as well as the trade, transportation and utilities, which are
0%
expected to keep growing in 2017. Local employers plan to
add 22,000 jobs this year, an improvement over the 20,000
-3%
gained in 2016. Raleighs 2.4 percent payroll expansion
matches the national rate. Tech is a major driver of growth. -6%
Citrix Systems, for example, will add 400 new positions to the 09 10 11 12 13 14 15 16 17*
economy over the next five years. Supply additions will begin *Forecast YEAR
to apply greater pressure on rental conditions. Single-family
permitting has remained elevated over the past four years.
PERMITS
The Far North Raleigh and North Cary/Morrisville submarkets
16 SINGLE-FAMILY MULTIFAMILY
are well-positioned to handle new supply, which should keep
SFR vacancy in these areas low.
12
UNITS (000S)
In addition to a steady economic performance, low single-
family vacancy and strong projections for rent growth will draw 8
VACANCY
remaining in neighborhoods of similar quality, albeit in smaller-
$800 6%
sized homes.
Vacancy: Raleighs single-family rental vacancy is expected INVESTMENT HOME PRICE TRENDS
to end the year at 3.3 percent. Last year, the vacancy rate $120 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24%
was 4.6 percent.
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
33
SAN ANTONIO Employment: 1.9% Vacancy: 10 bps Rents: 1.7%
3%
The San Antonio metro hums along steadily with 19,000
new jobs projected to be added this year, a 1.9 percent gain.
0%
Overall, the rapid explosion in employment following the
recession has slowed as the energy sector has dragged on
-3%
overall growth. Within the market, trade, transportation and
-6%
utilities, education and health services, and government make
09 10 11 12 13 14 15 16 17* up three of the largest sectors of economy, and are expected
*Forecast YEAR to continue their growth. As part of a grant from the Economic
Development Incentive Fund, Oracle America, Inc. will add 350
jobs to the metro, with a minimum salary of $50,000. During
PERMITS
the fourth quarter of 2016, a $175 million redevelopment
8 SINGLE-FAMILY MULTIFAMILY
project was begun on San Antonios San Pedro Creek. This
second River Walk is expected to drive demand and further
6
new development in a currently underutilized portion of the
UNITS (000S)
4
citys downtown. This may lure further corporate expansions
and relocations to this region of the metro in the coming years.
2 Home prices in San Antonio continue to grow across both
the traditional and investor segments. As with most markets
0
across the nation, traditional home buyers are moving into
08 09 10 11 12 13 14 15 16*
higher priced properties in newer neighborhoods. Investors in
*Annualized 3Q 2016 YEAR
this market, however, are remaining in mid-tier neighborhoods
where renter demand is strong. Cap rates in San Antonio
VACANCY & RENT continue to outperform national rates, though they have
$1,600 SFR RENT VACANCY 14% dropped to just below 7 percent. Projected rent growth for
2017 has also dropped slightly; rents are expected to increase
$1,400 12% 1.7 percent over 2016 levels. Slower NOI growth and strong
MONTHLY RENT
VACANCY
$800 6%
Employment: Employment growth in San Antonio remains
09 10 11 12 13 14 15 16 17*
steady, expanding by 1.9 percent, with 19,000 new spots
*Forecast
expected this year. Last year, employers added 13,500
YEAR
positions.
YEAR-OVER-YEAR CHANGE
$90 8%
Rent: In 2016, San Antonio rents ended the year at $1,399
per month. This year, landlords are expecting a 1.7 percent
$80 0%
improvement, raising rents to $1,423 per month.
$70 -8% Investment: Planned redevelopment of the San Pedro
Creek region of downtown San Antonio will drive new
$60 -16% development in the coming years. With steady employment
09 10 11 12 13 14 15 16*
and declining vacancies, this submarket still will retain long-
*Through 3Q 2016 YEAR
term potential for single-family investors.
34
SAN DIEGO Employment: 2.5% Vacancy: 90 bps Rents: 3.5%
YEAR-OVER-YEAR CHANGE
The technology and biotech sectors have reshaped San
3%
Diego, bolstering job growth and contributing to the metros
economic expansion. Last year, the economy grew 2.3 percent
0%
as local employers added 32,000 new positions, yet in 2017,
the economy is projected to grow even further to 2.5 percent
-3%
with the addition of 36,000 new jobs. According to startup
accelerator CONNECT, the innovation sector accounts for $52 -6%
billion, or 24 percent of the regions gross GDP. San Diego 09 10 11 12 13 14 15 16 17*
County ranks among the top 10 for startup activity, launching *Forecast YEAR
405 new companies in 2015 and is No. 1 in the country for
life sciences startups. The San Diego Regional Economic
PERMITS
Development Corp. also recently reported that the metro
8 SINGLE-FAMILY MULTIFAMILY
ranks seventh among the top 50 U.S. metros for its software
industry, ahead of Austin, New York City and Portland. In 2017,
6
vacancy is anticipated to dip to 1.6 percent, a decade-low rate.
UNITS (000S)
Investors are relatively active in the market, though high entry 4
VACANCY
in the mid- to high-3 percent range despite rising prices. To
$1,400 6%
achieve these yields, investors have moved further away from
the coast where prices can be significantly lower. This year,
$700 3%
rising capital costs will shrink the pool of deals that pencil out,
requiring investors to do more due diligence.
$0 0%
09 10 11 12 13 14 15 16 17*
MARKET OUTLOOK
*Forecast YEAR
Employment: This year, 36,000 new positions are expected
to be created in San Diego, a 2.5 percent gain.
INVESTMENT HOME PRICE TRENDS
Vacancy: SFR vacancy remains extremely tight in San Diego. $320 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 36%
This year, it is expected to drop to 1.6 percent, down 90
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
Rent: By year-end, rents are forecast to tick up to $2,616 per $210 12%
month, a 3.5 percent gain for the year.
4
to be affordable, thus slowing the pace of new multifamily
construction in 2017. The measure, known as Proposition C,
2
will also place downward pressure on already-tight vacancies.
VACANCY
infill areas like Mission Bay remain out of reach for investors
$2,200 4%
seeking yields, so instead target the East Bay.
$0 0%
Employment: Job growth is anticipated to accelerate to 2.7
09 10 11 12 13 14 15 16 17*
percent this year, as 33,000 positions are created. Last year,
*Forecast
31,000 spots were filled.
YEAR
YEAR-OVER-YEAR CHANGE
36
SAN JOSE Employment: 3.3% Vacancy: 60 bps Rents: 1.4%
YEAR-OVER-YEAR CHANGE
A well-educated workforce and innovative tech companies will
3%
continue to drive San Joses economy. Employment growth
in 2017 is expected to remain on par with last years growth,
0%
edging up slightly to 3.3 percent. Employers in the region will
add 36,000 jobs, courtesy of such tech stalwarts as Cisco
-3%
Systems, eBay, Facebook, Google, Intel and Oracle. While
VC funding firms have slowed financing for startups across -6%
the U.S., VCs are still investing in Silicon Valley companies. 09 10 11 12 13 14 15 16 17*
Andreessen Horowitz and KleinerPerkinsCaufield & Byers *Forecast YEAR
(KPCB), both based in Menlo Park, led the Bay Area in VC
funding during the second quarter of 2016, raising $1.5 billion,
PERMITS
while KPCB raised $1 billion. Meanwhile, the Saudi Arabia
8 SINGLE-FAMILY MULTIFAMILY
Investment Fund made a $3.5 million commitment to Uber
Technologies, one of the regions standout companies. On the
6
supply side, the addition of new units kept rents in check last
UNITS (000S)
year. In 2017, SFR rents are anticipated to rise 1.4 percent to 4
roughly $3,700 per month.
VACANCY
homes as investments in 2016. SFR housing prices remain at
$3,000 4%
a premium in the Silicon Valley, although investors seeking
long-term appreciation may want to target infill San Jose
$2,500 2%
neighborhoods away from the higher-priced Silicon Valley and
downtown markets.
$2,000 0%
09 10 11 12 13 14 15 16 17*
MARKET OUTLOOK
*Forecast YEAR
Employment: Staffing levels are projected to expand 3.3
percent as 36,000 positions are created, building on last
years 35,000 jobs. INVESTMENT HOME PRICE TRENDS
$700 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 36%
Vacancy: SFR vacancy is expected to inch up in 2017. This
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
Rent: Market-rate rents in San Jose are expected to rise 1.4 $400 12%
8
points in 2017 to a decade-low rate of 2.1 percent. Rent growth,
however, will slow to 5.5 percent to $2,350 per month.
4 Price growth for Puget Sound SFRs has remained strong due
to high renter demand derived from job growth. A wave of
0
investors from China and other foreign countries pouring
08 09 10 11 12 13 14 15 16*
capital into the local market drove median prices for all
*Annualized 3Q 2016 YEAR
types of homes to $450,000 last year after British Columbia
levied a 15 percent tax on foreign buyers purchasing homes
VACANCY & RENT in Vancouver. The percentage of investment home sales,
$2,400 SFR RENT VACANCY 8% however, dropped 120 basis points year-over-year to 18.3
percent, while the number of cash buyers active in the market
$1,800 6% dropped 500 basis points to 52.1 percent in 2016. For SFR
MONTHLY RENT
VACANCY
MARKET OUTLOOK
0%
$0
09 10 11 12 13 14 15 16 17*
Employment: Employment is projected to expand 3.3
*Forecast
percent as 56,000 positions are created in 2017.
YEAR
YEAR-OVER-YEAR CHANGE
$80 0% Investment: Seattle still has some inventory for those with
the resources to manage the markets higher entry prices.
$60 -12% Investors interested in stronger immediate yields will focus
on the Columbia City submarket, while those seeking long-
$40 -24% term growth from appreciation could turn their attention to
09 10 11 12 13 14 15 16*
West Seattle.
*Through 3Q 2016 YEAR
38
TAMPA Employment: 2.3% Vacancy: 10 bps Rents: 2.8%
YEAR-OVER-YEAR CHANGE
Similar to the other major Florida markets, strong job growth is
3%
expected for Tampa in 2017. Employment sectors responsible
for Tampas growth include trade, transportation and utilities;
0%
professional and business services; and education and health
services. One of the largest expansions in this space is being
-3%
undertaken by BlueGrace Logistics, a private-equity funded
transportation logistics company. Beginning in 2016, and -6%
extending through 2020, the firm will hire for at least 1,000 09 10 11 12 13 14 15 16 17*
new positions. Manufacturing jobs are also seeing a slight *Forecast YEAR
increase in the region, as evidenced by at least three major
expansion projects by Fresco Foods, North American Roofing,
PERMITS
and Johnson & Johnson. In total, these companies will spend
12 SINGLE-FAMILY MULTIFAMILY
over $25 million on growing their respective presences, while
creating a minimum of 750 new positions in the metro. Other
9
notable projects include Accusoft and Iron Boy Technologies.
UNITS (000S)
The former is a Tampa-based imaging company that will 6
double its workforce by 2021. In total, the company will create
125 new positions, each paying $75,000 or more, annually. 3
The latter is a Virginia-based tech support company, that will
open a Tampa customer service center and hire for at least 0
170 additional positions. 08 09 10 11 12 13 14 15 16*
*Annualized 3Q 2016 YEAR
While Florida was late to the recovery, price growth has
rebounded for both traditional and investment homes. More
investors are utilizing leverage than previously, however, VACANCY & RENT
the percentage of cash investment sales still outpace $1,600 SFR RENT VACANCY 15%
VACANCY
mirroring the national trend. Nonetheless, average cap rates
$800 9%
remain attractive, above 7 percent, though have experienced
a slight compression in the past year. While investors in
$400 6%
other Florida markets such as Orlando and Jacksonville have
moved down the quality scale to compensate for the growth
$0 3%
in prices, investors in Tampa continue to invest in the same 09 10 11 12 13 14 15 16 17*
neighborhoods as the year prior. *Forecast YEAR
MARKET OUTLOOK
Employment: Employers are expected to add 30,000 new INVESTMENT HOME PRICE TRENDS
$100 MEDIAN PRICE PER SQUARE FOOT YEAR-OVER-YEAR CHANGE 24%
jobs in 2017, representing a 2.3 percent gain.
PRICE PER SQUARE FOOT
YEAR-OVER-YEAR CHANGE
Vacancy: Vacancy rates in this market are projected to tick $80 12%
up slightly from 2016 levels, ending the year at 7.5 percent.
Chicago Orlando
40
Contact:
Steve Hovland Don Ganguly Media Contact:
Director-Research Services CEO Stacey Corso
shovland@homeunion.com don@homeunion.com Communications Manager
2010 Main Street, Suite 250 2010 Main Street, Suite 250 stacey.corso@homeunion.com
Irvine, California 92614 Irvine, California 92614 (415) 672-6460
(949) 229-8625 (866) 732-3220