Build-for-Rent Homes Provide Buffer for Housing Shortage

According to new data from the current Single-Family Rental Market Index (SFRMI), released this week and produced by the National Rental Home Council (NRHC) and John Burns Real Estate Consulting (JBREC), homes built for the purpose of renting – ‘build-for-rent’ homes – accounted for 26% of properties added to the portfolios of single-family rental home providers in the Q4 of 2021, compared to just 3% in Q3 of 2019.

Purchases of existing individual homes by single-family rental home providers during that time decreased from 81% to 57%. Providers of single-family rental homes increasingly turned to the development of new housing over the past two years as a means of responding to housing market supply constraints and a corresponding surge in demand for single-family rental housing.

“America needs a viable and sustainable supply of quality, affordably-priced rental housing. By making long-term commitments to the communities in which they build and invest, single-family rental home providers are constantly working to meet the demand,” said David Howard, Executive Director of NRHC. “One of the areas where this is most evident is in the market for build-for-rent housing, an innovative effort to bring new supply to the market for rental housing, providing communities with an invaluable source of critically needed middle-income and workforce housing.”

For perspective on today’s housing supply-demand dynamic, consider:

• There are 870,000 more renter households today than there were at the beginning of the COVID health pandemic. (Harvard’s Joint Center for Housing Studies)
• In 2020, there were 65,000 entry-level homes built in the United States. During the 1970s the number of entry-level homes built in the United States routinely surpassed 420,000 annually. (Bipartisan Policy Center)
• Over the last five years, the amount of owner-occupied housing in the United States has increased more than 10% while the amount of rental housing has increased just over 2%. (U.S. Census Bureau)
• Between 2018 and 2020 the housing stock deficit increased by 52% as the undersupply of homes in the U.S. soared from 2.5 million units to 3.8 million units. (Freddie Mac)

“Single-family rental homes are a critical part of America’s housing ecosystem, providing affordably-priced, well-located housing for millions of families and households across the country,” according to Howard. “During and following the COVID health crisis, access to single-family rental homes has become even more important as Americans have had to adjust to new realities of working and schooling from home. Single-family rental homes provide a convenient and affordable option for families searching for either a short- or long-term means to address their housing needs.”

The SFRMI for the fourth quarter of 2021 contained data from single-family rental home providers in over 50 metro areas across the United States managing more than 200,000 properties.