HouseCanary’s HCRI measures the Effective Gross Yield (EGY) of the single-family rental (SFR) industry as a whole to give investors, lenders and renters a health benchmark of the for-lease market by state, ZIP code and block.
"Of the top 50 metros, only 3 metros have shown positive growth in yields over the last quarter,” said Alex Villacorta, HouseCanary’s EVP of Analytics. “Though the most abundant double-digit opportunities reside in the Southern region of the country, there are still several localized pockets of high-yield opportunities in most markets throughout the country.” The nationwide EGY is holding at 8.0 percent, despite the continued rise in housing prices.
The top five highest MSAs by EGY as listed by HouseCanary in Q3 were Rochester, Memphis, Buffalo, Birmingham, and Cleveland. The EGY of three of the top MSAs’ decreased compared to last quarter, including Rochester at 13.9 percent which had the largest decrease of 3.3 percent. HouseCanary indicates this drop as a sign that the top MSA market may be beginning to soften. It’s also worth noting no other MSA decreased more than 0.7 percent compared to Q2.
The MSAs of Memphis,TN-MS-AR, Buffalo-Cheektowaga, Birmingham-Hoover, and Cleveland-Elyria landed at 13.7, 13.3, 13.1, and 13.0 percent respectively.
The HCRI analyzes 40 years of residential property data spanning over 1 billion transactions, 100 million macroeconomic and local data points, and 3 million census blocks across the country. Lenders and investors have only been able to calculate gross yields for individual properties or their own portfolio of properties in the past, but this data provides the industry with a uniform and centralized index of rental yields.
The methodology and data can be viewed here.