Home / Daily Dose / Why Investors are Buying into Single-Family Rental
Print This Post Print This Post

Why Investors are Buying into Single-Family Rental

Single-family rents increased 3% year over year in August 2019, according to the latest CoreLogic Single-Family Rent Index (SFRI). Low-end rentals, with rents 75% or less of a region’s median rent, made up a large chunk of August’s growth, as rents on lower-priced rental homes increased 3.7% year over year and rents for higher-priced homes, defined as properties with rents more than 125% of the regional median rent, increased 2.7% year over year.

In an interview with DS News, CoreLogic Principal Economist Molly Boesel discussed how the increase in single-family rentals has impacted the housing market as a whole, and why many potential homeowners are turning to rentals.

“Some of the demand has come from households displaced by foreclosure and some has come from millennial households who are looking for a single-family home but are not ready to buy,” Boesel said. “Just as the market has a low supply of for-sale housing, some markets also have a low supply of for-rent housing, which has driven rents up.”

According to a post on the NAHB's Best in American Living blog, renting by choice–instead of owning outright–is becoming increasingly popular among millennials.

The blog said that this was where newly constructed built for-rent single-family homes came into the picture. These homes, according to the blog, present millennials "with a terrific opportunity to live the American dream–without the additional responsibilities and stress of homeownership."

According to realtor.com, investors are using the popularity of single-family rental to their advantage. Real estate investors purchased 7.7% of all homes in the second quarter of 2019, up 0.6% year-over-year, the most speculation the market has seen 2013. 

St. Louis is considered the most appealing destination for both flippers and landlords, with 18.8% of sales as investment properties. 

"Twenty years ago, [real estate investors] were all locals," says St. Louis broker and landlord Dennis Norman of MORE Realtors. Now, "we have a lot of investors from California, from Colorado, and even international investors."

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

Check Also

Sagent Announces Multi-Year Extension with Gateway First Bank

A new deal is predicted to accelerate community-focused growth in banking and mortgage by combining digital simplicity ...

Your Daily Dose of DS News

Get the news you need, when you need it. Subscribe to the Daily Dose of DS News to receive each day’s most important default servicing news and market information, absolutely free of charge.