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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 76 J O U R N A L April 2023 to come. But the recent banking crises could lead to a pause on rate hikes and a reversal in mortgage rates. Prospective homebuyers will be watching rates closely, and we may see vola- tility in weekly contract activity as people react to ups and downs in mortgage rates." THE BEST COUNTIES FOR BUYING SINGLE- FAMILY RENTALS A s rentals continue their upward trend, ATTOM has released its Q1 2023 Single-Family Rental Market report, which ranks the best U.S. markets for buying single-family rental properties in 2023. The report shows that the average annual gross rental yield on three-bedroom properties, (annualized gross rent income divided by pur- chase price) among the 212 counties analyzed is projected to be 7.5% in 2023. That is up from an average of 6.7% in 2022 in those same markets and marked the first time since at least 2019 that the figure rose across the country. The single-family rental yield is in- creasing from 2022 to 2023 in 91% of those counties, after declining from 2021 to 2022 in 72 percent of them. With rental yields on the rise, rents are increasing faster than home prices across most of the country. From 2022 to 2023, three-bedroom rents rose more than single-family home prices in 192, or 91%, of the markets analyzed. Rents commonly have risen by around 5% to 20% over the past year, while changes in home values have typically ranged from a 5% loss to a 5% gain. "The broader housing market didn't fare nearly as well in 2022 as it did in 2021. Prices finally hit the wall, at least temporarily. But that appears to be benefitting the growing number of investors around the U.S. who rent out single-family properties," said Rob Barber, Chief Executive Officer at ATTOM. "Rents for single-family homes are growing while prices have flattened out, which has helped boost yields for landlords for the first time in at least several years." The improving scenario for single-family landlords has come following a year in which the U.S. housing market changed course. The nation's 11-year price runup abruptly stalled as home-mortgage rates doubled to nearly 7%, consumer price inflation remained at 40-year highs and the stock market fell. All those factors cut into what prospective home buyers could afford, helping to lower the na- tionwide home price by 8% in the second half of 2022 but allowing rental yields to rise. Additional price declines "could cut both ways for landlords," Barber added. "They could raise yields even more but also rekindle super-heated demand for home purchases, away from rentals." Top rental returns in Indian River, Collier, Wayne, Mercer, and Charlotte counties, as well as other parts of South, Midwest, and Northeast regions Counties with the highest potential annual gross rental yields for 2023 are Indian River County, Florida, in the Sebastian-Vero Beach metro area (15%); Collier County, Florida, in the Naples metro area (14.7%); Wayne County, Michigan, in the Detroit metro area (13%); Mercer County, New Jersey, in the Trenton metro area (12.7%); and Charlotte County, Florida, in the Punta Gorda metro area (12%). Aside from Wayne County, the highest potential annual gross rental yields in 2023 among counties with a population of at least 1 million are in Cook County (Chicago), Illinois (11.5%); Cuyahoga County (Cleveland), Ohio (10.1%); Oakland County, Michigan (outside Detroit) (9.1%); and Palm Beach County (West Palm Beach), Florida (8.5%). Among the top 50 rental returns for counties analyzed in 2023, 29 are in the South, with another 13 in the Midwest and eight in the Northeast. None are in the West. "The broader housing market didn't fare nearly as well in 2022 as it did in 2021. Prices finally hit the wall, at least temporarily. But that appears to be benefitting the growing number of investors around the U.S. who rent out single- family properties." —Rob Barber, CEO, ATTOM