Local Real Estate News
SC Housing Homebuyer Program
Greenville News November 5, 2014
Rental Yields High in Five S.C. counties
By Ashley Barker
GSA Business
abarker@scbiznews.com
Published July 8, 2014
Five counties in South Carolina were ranked in the top 25 best markets for buying residential property rentals in the United States, according to a report from RealtyTrac.
The real estate data company calculated annual gross rental yields by dividing the average fair market rent of three-bedroom homes in each county by the median sales price of residential properties in the area. Unemployment rates were also factored into the rankings.
Anderson County took the top spot in the country with an annual gross rental yield of 15.33%. The county’s fair market rent for a three-bedroom home was $893, and median sales price was $69,900 during April, according to RealtyTrac’s Q2 2014 Residential Property Rental Report.
Pickens County, with a $975 fair market rent for a three-bedroom home and $90,000 median sales price, ranked No. 3 in the U.S. with a 13% annual gross rental yield.
Lexington and Dorchester counties were in the top 10 with 11.26% and 9.95% annual gross rental yields, respectively. Lexington’s fair market rent was $1,046 and its median sales price was $111,500, while Dorchester’s rent was $1,160 and its median sales price was $139,900, according to the report.
Greenville County took the 21st spot with a 9.14% annual gross rental yield based on a $975 three-bedroom fair market rent and $128,000 median sales price in April.
Unemployment rates in all counties in the top 25 list were 4.5% or lower in April and each had an annual gross rental yield of 9% or higher, the report said.
Other counties on the list included Woodbury County, Iowa; Alachua, Fla.; Spotsylvania County, Va.; Allegheny County, Pa.; Franklin County, Ohio; and Douglas County, Neb.
RealtyTrac’s report also found that median home prices in the 370 counties that were analyzed increased more than 7% on average in the second quarter of 2014 compared with a year ago. The average fair market rents for three-bedroom homes also went up an average of less than 1%, the report said.
During the past year, home prices have increased at a faster pace than fair market rents in most counties, according to RealtyTrac Vice President Daren Blomquist. He said that has eroded the average returns available to investors buying rental properties.
“Even so, an average annual return of nearly 10% across all the counties we analyzed nationwide is still solid, and investors holding on to rental property for the long term will also typically benefit from home price appreciation on top of the annual returns from rental income,” Blomquist said in a statement.
Three Upstate Counties Rank Among the Top Markets in the Nation for Buying Residential Rental Properties
Three Upstate counties rank among the top markets in the nation for buying residential rental properties.
That’s according to RealtyTrac’s Q2 2014 Residential Property Rental Report which primarily looks at the rate of return a real estate investor could get by buying a rental property in 370 U.S. counties, based on the price they’re buying it for and then the average rents that they can rent out the property for.
The 2014 average rate of return on rental properties is a “very solid” 9.7 percent nationwide, said Daren Blomquist, RealtyTrac vice president.
RealtyTrac factored in unemployment rates along with annual gross rental yields to select the 25 best markets for buying residential property rentals. Counties in the top 25 all had unemployment rates of 4.5 percent or lower in April 2014 — well below the national average of 6.3 percent — and had an annual gross rental yield of 9 percent or higher.
The three best markets for buying residential property rentals were Anderson County, S.C., in the Anderson metro area (15.33 percent annual gross rental yield); Woodbury County, Iowa, in the Sioux City metro area (13.02 percent); and Pickens County (13 percent), RealtyTrac said.
Greenville County was ranked 21st, with a 9.14 percent gross rental yield. Other counties in the state that made the top 25 list were Lexington (11 percent) and Dorchester (10 percent).
Being on the top of this list shows a market that is very healthy, has a very low unemployment rate and is a place where home prices are still reasonably priced, Blomquist said.
The report is primarily for real estate investors to help them identify markets where they can make a good return on their investment on buying properties, he said. It’s also “good news” for first-time home buyers because it indicates markets where it’s probably going to be less expensive for them to buy a property than it is to rent, he said.
RealtyTrac also combined demographic data from the U.S. Census Bureau with the annual gross rental yield data to determine the 25 best markets for renting to the baby boomer population — those born between 1945 and 1964 — and the 50 best markets for renting residential property to the millennial population — those born between 1977 and 1992.
The only metro area in South Carolina in the top 25 list for renting to baby boomers is Hilton Head. The baby boomer population there grew 33.9 percent between 2007 and 2013.
Charleston was the only area in the state to make the listing for top millennial rental markets.
All 50 counties on the list saw an increase of at least 10 percent in the millennial demographic between 2007 (looking at the population ages 15 to 30 at that time) and 2013 (looking at the population between 21 and 36 at that time) and had a millennial population that represented at least 24 percent of the total population in 2013, the report said.
Charleston’s millennial population increased 27 percent during that period. The annual gross rental yields for the top 50 millennial rental markets ranged from 5.53 percent in Charleston County, up to 21.32 percent in Baltimore City, Maryland, RealtyTrac said.
A lot of millennials are renters before they are homeowners, Blomquist said. “Looking at these markets where they’re moving to will be markets where, for at least the next five years, it’s going to be great to own rental property,” he said.
Greenville County saw its millennial population grow by 13 percent between 2007 and 2013. Although Pickens County was ranked among the best markets for rental properties, its millennial population decreased by 13.2 percent during that period.
That could mean the county will likely have fewer millennials to rent to, Blomquist said.
He said the decrease may be due to younger generations moving to Greenville County.
“The trend with millennials is that prefer to live in more urban, centrally located, walkable types of areas, he said.
-Article by Angelia Davis, Greenville News
View the article here. Published on 7/4/14.