- Share
-
-
-
-
RentRange Identifies 25 Markets with the Highest Average Gross Yield
June 6, 2017
Detroit, Cleveland and Milwaukee top the list
LUXEMBOURG, June 6, 2017 – RentRange, one of the premier providers of market data and analytics for the housing industry, today released data ranking the top 25 U.S. metropolitan statistical areas (MSAs) by highest average gross yield for single-family[1] homes during the first quarter (Q1) of 2017. The data analysis also identified the average rental rate increase between the first quarter (Q1) of 2017 and the same quarter in 2016, average vacancy rate in Q1 2017 and investor purchases over the past 12 months.
The Q1 2017 RentRange® data shows that the highest yielding markets are dominated by older metro areas in the Midwest and Northeast. Sales price increases in these markets have lagged behind faster growing markets in the South and Southwest. Some notable exceptions to this Midwest and Northeast domination are metro areas such as Oklahoma City or McAllen. Other exceptions include Columbia, Shreveport and Birmingham. While they may not have the cosmopolitan attraction of larger regional markets like Atlanta, Charlotte or Houston, the rents are generally more affordable in these areas.
Analyzing the average vacancy rates, which is the percentage of rental properties that are vacant or unoccupied at a particular time, the lowest rates from the list are in Pittsburgh, Indianapolis, St. Louis, Oklahoma City and Canton. Lower vacancy rates generally mean properties stay vacant for less time, limiting the loss of rent.
Only four of the markets included in the high-yielding list show a decline in rent over the past year: McAllen, Canton, Columbia and Pittsburgh, while two markets in Michigan — Flint and Lansing — showed gains exceeding nine percent.
The pace of investor purchases can also be an indicator of the attractiveness of the market. A high number of purchases generally indicates that a large number of investors find the market appealing from a single-family rental investment standpoint. Detroit, Rochester, St. Louis and Indianapolis top the list of investor sales.
“The first step every investor should take when looking to invest in single-family rentals is to conduct due diligence by researching historical housing and rental data, the local economy and property-specific financial information like insurance, taxes, gross yield, net yield and cash flow,” said Dennis Cisterna, chief revenue officer, RentRange Data Services. “Today’s investor has a leg up on their predecessors because this type of information is now readily available in a way it was never before. While many markets may have high yields, they may have quite different rent growth percentages and vacancy rates. A strong market would generally have a combination of high yields, low vacancies and high rent growth.”
Ranking by Average Gross Yield — Q1 2017[2]
|
Rank
|
MSA
|
Average Gross Yield – Q1
|
Change in Rent
– Q1
|
Average Vacancy Rate – Q1
|
Investor Purchases – Q1 2016 - Q1 2017
|
|
1
|
Detroit-Warren-Dearborn MI
|
17.0%
|
0.9%
|
8.6%
|
45,159
|
|
2
|
Cleveland-Elyria OH
|
16.6%
|
0.9%
|
8.0%
|
6,408
|
|
3
|
Milwaukee-Waukesha-West Allis WI
|
15.8%
|
3.8%
|
5.3%
|
3,478
|
|
4
|
Youngstown-Warren-Boardman OH-PA
|
15.7%
|
5.3%
|
10.5%
|
1,666
|
|
5
|
Rochester NY
|
15.6%
|
2.1%
|
5.9%
|
10,951
|
|
6
|
Dayton OH
|
15.1%
|
3.6%
|
5.1%
|
3,361
|
|
7
|
Toledo OH
|
15.0%
|
2.7%
|
5.8%
|
2,187
|
|
7t
|
Flint MI
|
15.0%
|
9.3%
|
9.6%
|
3,263
|
|
7t
|
Syracuse NY
|
15.0%
|
1.1%
|
7.6%
|
4,142
|
|
8
|
McAllen-Edinburg-Mission TX
|
14.5%
|
-1.2%
|
7.4%
|
2,365
|
|
9
|
Birmingham-Hoover AL
|
14.0%
|
0.9%
|
7.4%
|
6,291
|
|
10
|
Memphis TN-MS-AR
|
13.9%
|
2.8%
|
11.9%
|
6,020
|
|
11
|
Tulsa OK
|
13.7%
|
0.2%
|
9.3%
|
3,752
|
|
12
|
Mobile AL
|
13.5%
|
2.6%
|
7.3%
|
2,480
|
|
12t
|
Canton-Massillon OH
|
13.5%
|
-2.0%
|
4.4%
|
1,572
|
|
13
|
Kansas City MO-KS
|
13.4%
|
1.3%
|
6.5%
|
7,887
|
|
14
|
St. Louis MO-IL
|
13.3%
|
0.9%
|
4.8%
|
13,856
|
|
15
|
Oklahoma City OK
|
13.2%
|
0.9%
|
4.5%
|
5,611
|
|
15t
|
Buffalo-Cheektowaga-Niagara Falls NY
|
13.2%
|
1.3%
|
5.2%
|
6,955
|
|
15t
|
Akron OH
|
13.2%
|
2.7%
|
6.0%
|
2,481
|
|
15t
|
Lansing-East Lansing MI
|
13.2%
|
9.4%
|
5.4%
|
4,994
|
|
16
|
Shreveport-Bossier City LA
|
13.1%
|
0.4%
|
7.0%
|
1,594
|
|
16t
|
Indianapolis-Carmel-Anderson IN
|
13.1%
|
4.2%
|
4.5%
|
8,308
|
|
16t
|
Columbia SC
|
13.1%
|
-0.2%
|
7.2%
|
2,857
|
|
17
|
Pittsburgh PA
|
12.8%
|
-1.7%
|
4.3%
|
6,681 |
Methodology:
RentRange produced the rankings of three-bedroom homes using metropolitan statistical areas, a standardized method for identifying city centers and immediate suburban areas. RentRange gathers rental data on approximately 250,000 single-family houses per month from a variety of contractual sources, including multiple listing services, property managers, landlords and listing websites. Vacancy rates are calculated from a proprietary algorithm based on data from the United States Postal Service.
About RentRange Data Services
RentRange Data Services is an innovative marketing services company specializing in U.S. real estate. The company provides marketing services to Investability and RentRange.
About RentRange®
RentRange is one of the nation’s premier providers of information for the single-family residential sector, delivering address- and market-level rental data, analytics and rent-based valuation solutions for a diverse customer base. The RentRange® reports help customers make data-informed decisions about the single-family residential market. The RentRange suite of data solutions includes individual property reports, market metric reports, customized data and analytics and single-family residential investor lists. RentRange is part of the Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) family of businesses.
About Altisource®
Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing market. Additional information is available at altisource.com.
[1] RentRange reviewed data for single-family, three-bedroom homes.
[2] All yield, rental, vacancy rate and investor purchase data referenced is provided for information purposes only and should not be considered advice or otherwise be relied upon for investment decisions.