For a detailed view of the Q2 report, click on the rental report below. You can get a printable copy by clicking here.
Hello everyone!
The single-family rental market in Q2 has seen a simultaneous increase in both inventory and leased properties. This dual rise has led to a saturated rental market, keeping rental rates stable and preventing significant increases that could offset rising home purchase prices. Given that we have not seen a notable decrease in inventory or a surge in demand by now, we can expect rental rates to remain stable and the market to stay saturated through 2024. Therefore, reducing vacancy days must be a priority.
However, there is a silver lining. The 2024 Rent-to-List ratio is mirroring that of 2021—a year when we saw a significant increase in demand, leading to sharp rental rate increases and decreased vacancy days. While I don’t expect the same market dynamics in 2024, the Ren-to-List ratio indicates that the saturated market is leveling out and investors are gradually moving toward more profitable opportunities. This shift could signal a more balanced and potentially lucrative rental market ahead.
-Oscar Armendariz
Overall Market Comps
Increase in Leased Properties
The number of single-family properties leased during this period saw a significant rise of 14.66%. This uptick indicates a healthy demand for rental properties, possibly due to population growth, changing housing preferences, or economic conditions making renting more appealing than buying. Renting in Lubbock has reached a point where it is a cheaper option than purchasing a home, especially for those looking to stay in the area for less than two years.
Average Rents
Average rents have remained relatively flat, with a slight decrease of 0.77%. This minor dip suggests that despite the increased demand and leasing activity, rental prices are falling. With more properties becoming available, the saturation of the rental market is likely keeping rental rates in check and preventing significant rent hikes.
Days on Market
The average days on market (DOM) for single-family homes reduced by 5.26%. This decrease indicates that properties are being rented out more quickly, which is a positive sign for landlords and property managers. It suggests a competitive market where renters are actively seeking and securing housing more swiftly.
Parting Thoughts
For Owners Who Have Owned Their Homes for More Than 3 Years
If you have owned your home for more than three years, you are likely benefiting from the average rent increase over that period. For example, the average rent was $1,120 in 2019, and as of June 30, 2024, it has risen to $1,380, representing a 16% increase. Additionally, with lower interest rates, this market remains advantageous. The stable rental income, coupled with lower financing costs, provides a steady and potentially profitable investment environment.
For Owners Who Have Owned Rentals for Less Than 3 Years
For those who have owned rental properties for less than three years, it is important to remain patient and stay the course. Market saturation is expected to subside eventually. Single-family investment is inherently a long-term strategy. Focus on maintaining high occupancy rates rather than seeking high rents. Prioritize reducing your days on the market (DOM) by ensuring your property is appealing and competitively priced rather than cutting essential expenses that help in reducing the DOM.
By focusing on these strategies, you can navigate the current market conditions effectively and position your investments for future growth.
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