One of the most dramatic shifts in the U.S. market over the past decade has been the unprecedented increase in single-family home rentals (“SFRs”). While there has been widespread discussion of the economic and demographic shifts affecting the U.S. multifamily rental market, a major component of the overall rental market—single-family rentals—has been largely overlooked. Understanding the recent dramatic shifts in the single-family rental market is critical to having a complete picture of the overall U.S. housing market.
As we set out to better understand the key drivers of the single-family rental market, we asked the following questions: What are the characteristics of the rental market for single-family homes? What market conditions and actors have driven changes in single-family rentals over time? What are the economic and demographic characteristics of households living in single-family rentals?
Our research found that:
- Between 2005 and 2014, single-family rentals accounted for 88.9% of the net increase in occupied single-family stock and 62.5% of the increase in total occupied housing units.
- While institutional-investor-owned inventory comprises a tiny share of overall single-family rental stock, the ongoing institutionalization of the sector—as well as its staying power—are key indicators of the market opportunity.
- Single-family renter households predominantly consist of lower- and middle-income families with children, whereas single-family homeowners are much more likely to be older, wealthier, and not have children at home.
The 15.1 million rented single-family homes in the U.S. account for 13% of all occupied housing stock in the U.S. and make up over one-third of all occupied rental housing stock. In the U.S., there are roughly 117 million occupied housing units. Of these, 80 million are single-family (attached and detached), 30 million are in multifamily buildings with two or more units, and just under 7 million fall into other categories. Within this inventory mix, there are approximately 73 million owner-occupied housing units and 43 million renter-occupied units. Single-family detached homes made up the largest individual share of the rental housing stock, comprising 29% of the entire rental market in 2014. Combining that portion of the market with the share of townhomes (single-family attached), all single-family residences accounted for 35% of the occupied rental stock in 2014.
The SFR market has come across the problem of dwindling inventory, calling for the need for build-to-rent homes. If you are an investor looking to diversify your portfolio with build-to-rent contact the 9 Core Realty team!