SAN FRANCISCO, March 15, 2017 /PRNewswire/ -- HouseCanary, Inc. today announced the launch of the HouseCanary Rental Investment Index (HCRI Index) that allows millions of single-family rental home investors, lenders, and renters to benchmark the health of the single-family for-lease market.
Composed of nearly 20 million homes, the single-family rental home market is increasingly becoming an integral part of America's housing economy, helping to meet the growing demand for rental housing that has been driven by a confluence of factors, including an increase in lifestyle flexibility provided by leasing, declining home investment across the U.S., and tighter housing markets that have been influenced by credit availability.
These trends have presented an opportunity for operators to professionalize the single-family rental home market, bringing expanded leasing options to renters and a better and more consistent resident experience. HouseCanary will help accelerate efforts to advance an industry that has historically been fragmented and lacking a consistent way to benchmark returns for single-family rental investors.
"Given the massive size of the SFR market, separating the wheat from the chaff can be hard. The precision and richness of HouseCanary's data will help investors zero in on the areas that make the most sense for their investment strategies," said Gary M. Beasley, industry veteran and co-founder and CEO of Roofstock. Availability of information to all industry participants is expected to drive investor interest in rental properties, accelerate financing, increase competition, and give renters more choice and better quality as more individual owners improve homes to compete with institutional owners.
The HCRI Index measures Effective Gross Yield for the industry, computed as the current fair market annualized rent minus estimated property tax, divided by the current fair market home value. Effective Gross Yield is an important profitability metric for single-family rental home lenders and investors, who have historically only been able to calculate gross yields for individual properties or their own portfolio of properties. Single-family rental lenders and investors have been largely unable to benchmark their respective returns against the rest of the single-family rental home market. HouseCanary's vast, granular dataset of rent and home values enables the company to compute Effective Gross Yield at the national, state, and zip code level, and for 3 million census blocks across the country. HouseCanary is committed to refining the index over time and will introduce other industry metrics to serve single-family rental stakeholders.
Jeremy Sicklick, CEO and Co-Founder of HouseCanary, said, "We believe that making this information widely available will increase transparency, improve the availability of financing, and drive further investment in the single-family rental asset class, ultimately benefiting the millions of Americans who are choosing to rent and the U.S. housing market more broadly."
The HCRI Index will be calculated and available by state and metro area on a quarterly basis through a scheduled press release, with zip code and census block level data available on the company's website www.housecanary.com/rental-investment-index.
Effective Gross Yield by State
The United States National Effective Gross Yield as of March 15, 2017 is 7.7 percent (more information on methodology available in the Methodology section below). The state-by-state view reveals substantial regional differences in Effective Gross Yield, with the Western states and New England trailing the rest of the country. Accelerated home price appreciation in the Western U.S. has contributed to weaker yields. Home price appreciation nationally (and in these states) is expected to continue to outpace rent appreciation over the next quarter, with a geographically diverse real estate cycle continuing to further the imbalance across the country.
This trend is particularly strong in California, the state with the lowest Effective Gross Yield in the country at 5.2 percent. Conversely, Indiana and Mississippi, at 11.8 percent, are the states with the highest Effective Gross Yield. Throughout the Midwest and South, Effective Gross Yield has continued at elevated levels, fostering continued industry growth. Florida, Georgia, and the Carolinas – hotspots for investment from major institutional and public portfolios – remain among the highest-performing markets. States showing the highest potential Effective Gross Yields are Alabama, Ohio, and Louisiana.
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 2014, 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), Alpha Edison, ECA Ventures, Raven Ventures and others top Silicon Valley investors. The company is headquartered in San Francisco. Visit the company's website www.housecanary.com.
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SOURCE HouseCanary, Inc.