The single-family rental market gained traction as a viable asset class with phenomenal growth in 2015. According to Morningstar Credit Ratings managing director of RBMS Brian Grow, the fundamentals driving that growth were an increase in renters, a decrease in house prices, and a decrease in credit availability, all of which led to opportunities for investors. Those opportunities have declined somewhat recently due to recovering house prices and more buyers in the space.
Right now, Grow predicts the SFR market will be up somewhat in 2016 from last year, but the growth will depend on the performance of three multiborrower securitizations, which are deals that contain many loans made to smaller investors and are usually backed by five or more properties. Since the first single-family rental securitization was issued in October 2013, the majority of securitizations have been single-borrower deals, which consist of a single loan to a large institutional investor.
The year 2015 was a year of prosperity and growth for the housing market, and in turn, consumers displayed their confidence with positive feelings toward their income, job security, and overall economic outlook. Fannie Mae reported that their Home Purchase Sentiment Index rose 2 point 4 points to 83 point 2 in December. This increase wraps up the strongest year the housing market has experienced thus far.