Investment returns for single-family rental homes are expected to rise in 2024, buoyed by rent prices that are rising faster than home prices across the country.
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% for the same markets in 2023. That’s according to a first-quarter 2024 report from ATTOM.
From 2023 to 2024, median three-bedroom rents rose more quickly than median single-family home prices in 216 of the 341 counties analyzed (63%).
“The U.S. home sales market cooled off a good bit last year, with some of the weakest gains over the past decade,” Rob Barber, CEO at ATTOM, said in a news release. “But that wasn’t enough to make home prices affordable for most workers, which likely fed enough demand to push up rents and yields for investors who lease out single-family properties.”
Indian River County, Florida (located in the Sebastian-Vero Beach metro area), and St. Louis City, Missouri, are expected to have the highest annual gross rental yields on three-bedroom properties in 2024 at 14.6%.
They are followed by Cameron County, Texas, in the Brownsville-Harlingen metro area (13.2%); Monroe County, New York, in the Rochester metro area (12.8%); and Richmond County, Georgia, in the Augusta-Richmond County metro area (12.7%).
At the other end of the spectrum, Santa Clara County, California, in the San Jose metro area, is expected to have the lowest potential annual gross returns in 2024 at 3%. It is followed by neighboring San Mateo County, in the San Francisco metro area (3.4%); Arlington County, Virginia, in the Washington, D.C., metro area (3.8%); Williamson County, Tennessee, in the Nashville metro area (3.9%); and San Francisco County, California (3.9%).
A total of 28 counties were identified to have potential annual gross rental yields exceeding 10% for three-bedroom properties. 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 a population of at least 100,000 that had sufficient rent and home price data.
The report incorporated median rents and median home prices collected from its nationwide property database, as well as publicly recorded sales deed data licensed by ATTOM.
