HomeUnion® has ranked 30 metros based on how well each SFR market is anticipated to perform through year’s end.
In honor of football season kicking off this month, we’re getting into the spirit with our own list of powerhouse single-family rental (SFR) markets. For the second consecutive year, HomeUnion® has ranked 30 metros based on how well each SFR market is anticipated to perform through year’s end. Metro areas with strong demand from renters – employment, rent growth, turnover time – have the best offenses in this study. On the defensive side of the ball, metrics that work to retain renters (rent-to-income ratio, apartment construction, single-family permits) were deemed favorable.
Cap rates were likened to special teams for this study, explains Steve Hovland, director of research for HomeUnion®. “We compared cap rates, one of the most important measures of an SFR’s performance from an investment perspective, to special teams, the players who take the field at important times during a football game – punting, kickoffs and last-second field goals. Markets with high cap rates at midyear were favored over markets with lower rates.”
HomeUnion®’s Research Services team poured over a collection of big data to create this year’s list, which will help remote and local investors alike buy properties this year while interest rates are still near all-time lows. Here’s an in-depth look at the top 10 powerhouses on our list:
Dallas
Supported by a league-leading offense, Dallas claimed the top spot this year. Heading into the season, employment in the metro was the second highest. Dallas’ defense could be a liability at No. 25, but the metro should produce strong results for investors this season, aided by a high rent-to-income ratio.
Miami
This South Florida metro shot up nine places from 2016’s list to claim the second spot in this year’s rankings. A sixth-ranked offense and fourth-ranked defense make Miami a well-rounded contender. Declining vacancies, high rent-to-income ratios and a 6.3 percent average cap rate make this metro a leading performer for investors
New York City
The Big Apple’s offense ranks among the best in the league, which catapulted New York from 17th place last year to fourth place in 2017. While employment levels rank right in the middle of the league, New York is positioned for success this year, although special teams may be an issue for investors committed to this powerhouse
Buffalo
With one of the best special teams in the league, Buffalo comes roaring at opponents on either side of the ball with ferocity. Most aspects of the metro’s offense will remain strong through season’s end, but some facets still need to improve. Buffalo’s defense should pose a formidable threat to other teams with highly ranked construction and supply-side conditions.
Boston
A solid offense and defense combined to boost Boston from its 22nd-place ranking in the league to No. 5, an impressive jump. While the offense should remain stellar, we expect some issues on the defensive side of the ball, so proceed with caution when investing in this market.
Phoenix
A talented lineup of defenders and some offensive standouts – an economy ranked within the top 10 in the nation – combine to make Phoenix a team to watch this year. Special teams are the only concern headed toward year’s end in the Valley of the, which rank 23rd in the league.
Detroit
Shooting up in this year’s rankings from No. 20 in 2016 is the Motor City, with a strengthening offensive front and improving defense. Detroit’s economy continues to make strides, a factor for investors should consider if buying properties in the Midwest.
Seattle
Last year, Seattle was at the bottom of the Power Rankings but has made enough off-season improvements to claim the eighth spot this year. In particular, the team’s offense has soared, with an overall ranking of No. 4. Special teams might be the only hindrance to this team’s on-field performance, however.
Atlanta
An offensive powerhouse ranked second in the league, Atlanta should tear up opponents’ secondary this year. The highly ranked special teams will also give Atlanta a boost in 2017. Defense might be a factor moving forward, but Atlanta continues to be a force to be reckoned with – the metro has earned a place within HomeUnion®’s top 10 Power Rankings two years in a row.
Minneapolis/St. Paul
The Twin Cities are balanced on both side of the ball – offense and defense. An ultra-low vacancy rate makes their offense standout even more. The team will be further supported by a decently ranked special teams, which will help investors committed to this market.
Here’s a complete list of this year’s Power Rankings for SFR properties:
Metro | Rank | Median Investment Home Price | Median Rent | Cap Rate |
Dallas | 1 | $199,300 | $1,630 | 5.6% |
| Miami | 2 | $209,900 | $1,980 | 6.3% |
| New York, N.Y. | 3 | $431,100 | $2,148 | 3.9% |
| Buffalo, N.Y. | 4 | $105,000 | $1,285 | 8.5% |
| Boston | 5 | $333,800 | $2,337 | 4.7% |
| Phoenix | 6 | $180,000 | $1,264 | 4.7% |
| Detroit | 7 | $167,500 | $1,406 | 5.7% |
| Seattle | 8 | $450,000 | $2,218 | 3.3% |
| Atlanta | 9 | $131,000 | $1,243 | 6.4% |
| Minneapolis | 10 | $172,300 | $1,513 | 5.8% |
| Chicago | 11 | $235,000 | $1,798 | 5.2% |
| Nashville | 12 | $166,300 | $1,437 | 5.4% |
| Baltimore | 13 | $145,000 | $1,431 | 6.7% |
| Tampa Bay | 14 | $128,000 | $1,301 | 6.7% |
| Oakland, Calif. | 15 | $540,000 | $2,866 | 3.4% |
| Los Angeles | 16 | $601,300 | $2,959 | 3.4% |
| Pittsburgh | 17 | $83,000 | $920 | 7.6% |
| Charlotte, N.C. | 18 | $150,000 | $1,239 | 5.5% |
| Cincinnati | 19 | $91,700 | $1,161 | 8.3% |
| Philadelphia | 20 | $125,000 | $1,386 | 7.3% |
| Cleveland | 21 | $72,500 | $1,158 | 10.4% |
| Denver | 22 | $313,000 | $1,917 | 4.1% |
| Jacksonville, Fla. | 23 | $141,000 | $1,310 | 5.9% |
| New Orleans | 24 | $127,500 | $1,535 | 7.7% |
| Houston | 25 | $166,900 | $1,573 | 6.3% |
| Indianapolis | 26 | $98,000 | $1,081 | 7.7% |
| Kansas City | 27 | $139,400 | $1,118 | 5.7% |
| San Francisco | 28 | $1,160,000 | $4,496 | 2.5% |
| Milwaukee | 29 | $135,000 | $1,411 | 6.6% |
| Washington, D.C. | 30 | $275,000 | $1,881 | 4.5% |
Source: HomeUnion® Research Services
