It’s been a great year for single-family rentals (SFR). Both the institutional single-family rental and build-to-suit segments have performed well despite the challenges of the pandemic. Influences on the single-family rental market One of the first notable booms in SFR followed the Great Recession. Families sought the benefits of homeownership, which include but aren’t limited to space, privacy and land. Simultaneously, they avoided a mortgage crisis and the responsibilities of home maintenance. Fast-forward a little more than a decade and SFR have surged in popularity again. Though there is no strong correlation between population density and viral spread, many Americans fled cities due to COVID-19. They relocated to less populated areas. Families that were priced out of homeownership as well as those who wanted to avoid its responsibilities rented homes in the suburbs and rural areas. The momentum of this trend continues as families savor the benefits of single-family living. Institutions are investing in single-family rentals SFR compose about one-third of the 46 million rental homes in the U.S. Traditionally, the majority of those rentals (nearly 98%) are operated by individuals and small businesses. We are currently witnessing a shift as investors with deeper pockets enter the market. Institutions are heavily investing in SFR. More than $10 billion are scheduled to bolster the segment in the next several years. Industry powerhouses such as Lennar Corp and Greystar Real Estate Partners are investing at least $1 billion each. Newer organizations, such as American Homes 4 Rent and NexMetro are also major players in the built-to-rent sector. Rather than sifting through rental homes scattered throughout communities, renters will be able to enter entire neighborhoods of built-to-rent houses. Such communities compose nearly 12% of current single-family construction. The latest data on single-family rentals Though the pandemic contributed to the growing success of the sector, SFR aren’t a pandemic-dependent trend. Since 2016, SFR rent growth has exceeded that of conventional multifamily rentals. Through mid-year 2021, SFR had improved to 6.4% nationally. Occupancy rates were at 94.3% nationwide. Though rents are performing well overall, secondary and tertiary markets have experienced the greatest growth in the last two years. There are currently more than 12,200 SFR units under construction in 50-plus unit communities. More than two-thirds are being constructed in secondary markets. The remaining are in tertiary markets. Yardi Matrix reports no SFR communities are under construction in gateway metros. The Southwestern region leads in construction with 4,896 units followed closely the Southeast with 3,978. Phoenix is home to the most existing SFR in communities with more than 50 units (about 6,000). It is also where most construction is taking place, a 2,500-unit slice of the 12,200 built nationwide. Jacksonville, Charlotte and Houston each have about 700 units under construction, with Atlanta expecting 544 units. The Midwest pipeline consists of 1,716 units and the West reports 1,522 units. The Northeast lags with 132 units. Single-family rentals demonstrate staying power SFR have been a growing segment of the rental market since 2009. The surge in built-to-rent homes indicate that investors are committed to the benefits that they are receiving. They have the ability to control their brand and the renter experience from start to finish. They can also focus on a large number of holdings in fewer locations. Analysts propose that investors will enjoy improved liquidity, since there are more potential market participants with single-family construction. Download the complete Yardi Matrix single-family rental...
Single Family Rentals...
The latest frontier
Is there a market for renters who want it all? Privacy, outdoor living space, a manicured lawn and financial flexibility are available to renters of single-family homes. Research reveals that interest in single family rentals has been growing since the Great Recession. The pandemic further ignited demand, as demonstrated by a surge in the construction of single-family rentals. As the market develops, specialized technology is necessary for smart growth. Industry powerhouses set their sights on single-family rentals In mid-2020, the first wave of institutional buyers made their mark on the industry. During Q1 2021, they continued the trend by purchasing nearly 55,000 homes, according to Redfin data. Built-to-rent single family homes are also taking off. New York-based Trepp real estate analytics firm reports a 66% increase in single-family homes built to rent. Both homebuilders and apartment companies are entering the market. Builders such as Lennar Corp., the largest homebuilder in the nation by revenue, and multifamily behemoth Greystar Real Estate Partners are investing in single-family houses. Mike Clow, executive director at Greystar, aims to increase investment in the division by a noteworthy 1,566.66% percent by 2026. Operator Invitation Homes announced that it will spend $1 billion in single-family home acquisition in 2021, per an interview with Business Insider. While major players are pumping major dollars into the sector, small landlords still own the majority of single-family rentals. Only about 6% of new homes are built-to-rent. Single-family rental data by Yardi Matrix The demand for single-family rentals is reflected in the strength of rents and occupancy. Yardi Matrix reporting now includes insights into built-to-rent single-family communities. Data is compiled from more than 90,000 units in 700 communities nationwide. Single-family rentals (SFR) thrived during the pandemic. The industry recorded a powerful 7.3% year-over-year (YoY) rent...
