What is a ballpark percentage to assume SFH rents will increase per year long-term?

[Josh Lyons]

I've rented two homes over the last few years, and I'm interested in slowly buying more single-family homes and keeping them long-term. I'm curious if experienced investors have a ballpark percentage they factor that rents will increase, on average, over the long-term (like 30 years)? Is it good to assume it will gradually outpace overall inflation like around 4-5%? That's the ballpark number I've gathered after some reading on it.

[Chris Martin]

Quote from @Josh Lyons:

I've rented two homes over the last few years, and I'm interested in slowly buying more single-family homes and keeping them long-term. I'm curious if experienced investors have a ballpark percentage they factor that rents will increase, on average, over the long-term (like 30 years)? Is it good to assume it will gradually outpace overall inflation like around 4-5%? That's the ballpark number I've gathered after some reading on it.

The "correct" answer short term (like last year) is 6.1%. In general, rent increases in Raleigh (and I assume Charlotte) have closely matched inflation. Over the next 30 years, I use 2.5% as a "middle of the cone" annual number. 

That 6.1% number is based on 4,089 Charlotte MSA Single Family properties held by a large SFR REIT. The average monthly realized rent per property in Charlotte for 2023 was $2,077.

Source: American Homes for Rent Annual Report for the fiscal year ended December 31, 2023, page 27 (https://www.sec.gov/ix?doc=/Archives/edgar/data/1562401/000156240124000021/amh-20231231.htm)