SAN FRANCISCO, January 30, 2018 — HouseCanary Inc., the leading modern data analytics company for real estate professionals, announced the release of fourth-quarter data for its HouseCanary Rental Investment Index (HCRI Index). The HCRI Index helps single-family rental home investors, lenders, and renters benchmark the health of the single-family for-lease market by individual state, ZIP code, and block.
The nationwide Effective Gross Yield (EGY) for U.S. single-family rentals was 7.3 percent, sustaining a healthy yield in spite of the continued rise in housing prices. But even in states with relatively low EGY, there are opportunities available for rental investors who know where to look.
“The markets where rental yield is either unusually high or unusually low haven’t changed significantly in the past quarter, but our analysis shows that even in markets where EGY is average or middle-of-the-road, rental investors can still find hidden gems that will generate better-than-average returns,” said Alex Villacorta, HouseCanary’s Executive Vice President of Analytics.
“In fact, in this new normal of the housing market activity all market participants will have to be vigilant for these micro opportunities. For example, we examined five Southwest metro areas with average or below-average EGY — Phoenix, Tucson, Las Vegas, El Paso, and Albuquerque — which are also all markets where new opportunities exist for any investors who know exactly where to look.”
Rental yield in the Southwest
“No matter how hot or cold a given market, there are still opportunities for investors to make substantive returns,” noted Villacorta. “Small local investors have known for years that successful rental investments require a nuanced approach to acquisition. Our latest data show that from Nevada to Texas, metros in the Southwest — like Phoenix and Las Vegas — have certain hyper-local areas where rental investors can find homes that will generate higher-than-average rental yields for them, even where home prices continue to increase.”
HouseCanary's vast granular dataset of rent and home values enables the company to compute EGY at the national, state, and ZIP code level, and for 3 million census blocks across the country. The HouseCanary Rental Investment Index helps investors avoid the challenges traditionally presented by fractured information in the single-family rental sector. By providing the market with a uniform, centralized index of rental yields, HouseCanary is making it easier than ever for investors to amass large-scale SFR profiles remotely and with confidence.
Rental yield by state
HouseCanary's data analytics group has indexed, normalized, and analyzed 40 years of U.S. residential property data, spanning over 1 billion transactions and 100s of macroeconomic and local data points, to derive an accurate view of current home values and rental values nationally. The single-family, non-owner-occupied portion of these home and rental values is used to derive the Effective Gross Yield discussed in this document. Effective Gross Yield is defined as the current fair market annualized rent minus estimated property tax, divided by the current fair market home value. Effective Gross Yield can be computed for individual homes, U.S. census blocks, zip codes, states, and the national level. Homeowner association (HOA) fees and insurance costs are not included, as investors are able to add those costs at an individual portfolio level.
Founded in 2013, HouseCanary's mission is to help people make better real estate decisions. Built on a foundation of great data, powerful models, and predictive analytics, the HouseCanary platform aggregates millions of data elements, including more than four decades of property data and a rapidly expanding arsenal of proprietary calculations and analytics, to accurately define and forecast values and market influences. HouseCanary is financed by notable investors including Hillspire (Alphabet Executive Chairman Eric Schmidt's family office), PSP Growth/PSP Capital (firm founded by entrepreneur and former Commerce Secretary Penny Pritzker), Alpha Edison, ECA Ventures, Raven Ventures and others top Silicon Valley investors. The company is headquartered in San Francisco. Learn more: www.housecanary.com.