The 10 Best Counties For Renting Single-Family Homes To Millennials

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The Editors's picture
Top 10 counties for rentals to millennials of single-family homes

A new report has identified and ranked the 10 best counties for renting single-family homes to millennials.

 ATTOM Date Solutions first-quarter 2017 Single Family Rental Market report, which ranks the best U.S. markets for buying single family rental properties in 2017, shows the best millennial single-family markets are in Detroit, Kansas City, Oklahoma City and Duluth, Minnesta.

In all 10 counties, the millennial share of the population increased at least 5 percent between 2014 and 2015 — the most recent data available from the Census Bureau — and millennials accounted for at least 20 percent of the total population in 2015.

 All 10 counties also posted annual wage growth. For purposes of the report, millennials were defined as anyone born between 1979 and 1994, limiting it to millennials at least 20 years old in 2014 and likely to be potential homebuyers.

Sorted by annual gross rental yield, the top five millennial single- family rental markets were:

  • Saint Clair County, Michigan, in the Detroit metro area (14.5 percent gross annual rental yield)
  • Jackson County, Michigan (13.4 percent)
  • Saint Louis County, Minnesota, in the Duluth metro area (11.8 percent)
  • Jackson County, Missouri, in the Kansas City metro area (11.2 percent)
  • Cleveland County, Oklahoma, in the Oklahoma City metro area (9.7 percent)

Among the 375 counties analyzed in the report in these 10 counties millennials, ages 21 to 36 in 2015, had a 20 percent share of the population, plus at least five percent growth in that share of the population from 2014 to 2015. Also average weekly wages grew annually in these markets.

 Best Zip Codes For Renting Single-Family Rental Homes

The report analyzed single-family rental returns in 6,019 U.S. zip codes with a population of at least 2,500 and sufficient rental and home price data.

The top five zip codes with the highest potential single family rental returns for 2017 were:

  • 43605 in Toledo, Ohio (119.4 percent)
  • 63115 in St. Louis (90.4 percent)
  • 21223 in Baltimore (87.2 percent)
  • 08104 in Camden, New Jersey (86.3 percent)
  • 35208 in Birmingham, Alabama (78.4 percent)

Worst Zip Codes For Renting Single-Family Rental Returns

The five zip codes with the lowest potential single-family rental returns for 2017 were:

  • 33480 in Palm Beach, Florida (0.7 percent)
  • 90210 in Beverly Hills, California (0.8 percent)
  • 90402 in Santa Monica, California (0.8 percent)
  • 90049 in Los Angeles, California (1.1 percent)
  • 90272 in Pacific Palisades, California (1.2 percent)

“While good returns on single family rentals are hard to come by in high-priced coastal markets and in some other housing hot spots such as Denver and parts of Dallas, Austin and Nashville, solid returns on single-family rentals will continue to be available in many parts of the Southeast, Rust Belt and Midwest for investors purchasing in 2017,” Daren Blomquist, senior vice president at ATTOM Data Solutions, said in the release about the report.

“And single family rentals should continue to yield strong returns in many parts of the country going forward given the market undercurrents of low rent-ready housing inventory and low homeownership rates. Average fair market rents increased in 2017 in 86 percent of the markets we analyzed even while average wage growth outpaced rent growth in 67 percent of markets — a recipe for sustainable growth in the rental market.”

As Seattle Apartment Rates Climb, Single-Family Home Rents Flatten

“Unlike their apartment counterparts, single-family home rental rates in the greater Seattle area have leveled off significantly,” Matthew Gardner, chief economist at Windermere Real Estate, in Seattle said in the release. In King County the annual gross rental yield in 2017 is down from 2016 thanks to median home prices increasing 5 percent compared to a 1 percent increase in average fair market rents.

 “While home prices in this area continue to see steep increases, rents have not followed suit. I believe this is because the incomes of those who rent single-family homes are not keeping pace with rising home prices, so rents have had to adjust to the realities of the market.”

“Single-family home rental rates will likely continue to see very modest increases, as many of these renters are converting to buyers,” Gardner continued. “In fact, ‘Boomerang Buyers’, who were forced to become renters when they lost their homes to foreclosure, are now in a position to qualify for a mortgage again. This process could lead to declining demand for single-family rentals, forcing landlords to adjust their rents accordingly in order to keep their properties occupied.”

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