The Rise of the Single-Family Rental

The single-family rental market is booming, and the builders and developers tapping into the segment’s opportunities are thriving. Here’s why.

The rental market is hot. Since the start of the Great Recession, the number of Americans living in rental properties has soared to nearly 37%, the largest amount since 1965. Over the same period, households lived in by owners are at an all-time low, according to Census Bureau data.

One sector of rental housing has enjoyed a particularly dramatic rise. Single-family for rent is the fastest-growing segment of the U.S. housing market, according to an analysis by the Urban Institute, which reports that growth in single-family rentals has outpaced the growth of both single-family for sale and multifamily housing in recent years—and it is predicted to keep growing in the years ahead.

The demand for single-family rentals is undeniable, and it presents myriad opportunities for builders across the country. The growth in this segment has paved the way for builders to increase sales by selling to rental operators on a wholesale basis, and prompted a number of developers to tap into the market with a new product: cohesive single-family rental communities filled by niche renters with lifestyle needs that are unlike those of apartment renters.

Economic Factors
Industry experts say the current economic climate has created a perfect storm for the single-family rental market’s success. Student debt, a tight job market, and the inability to save for a down payment have kept a number of potential home buyers out of the market.

“Credit markets are still extremely tight, and a lot of people don’t have the right credit score. With stricter lending terms than ever, some consumers are not even potential participants in the market,” says Dennis Cisterna, CEO of Investability Solutions, a real estate investment firm in the single-family rental space. “[These factors] are eliminating people from homeownership. Without more alternative solutions to getting people into homeownership, whether that is a low–down payment mortgage or assistance programs, there will be a ramp up in rentership, which presents a great opportunity for builders to be able to grow with single-family rentals.”


Source: The Rise of the Single-Family Rental | Builder Magazine | Rent Trends, Single Family, Rents, Economics, Economic Conditions, Demographics, Single-Family Rentals, AHV Communities, NAHB, John Burns Real Estate Consulting