One of the most enduring legacies of the Great Recession turns out to be the prevalence of single-family homes as rental properties, according to a look at the single-family rental market by Trulia [1].
The study [2]starts in 2006, two years before the financial collapse when the U.S. housing market was in more seller-friendly mode than buyer-friendly. It compares the percentages of single-family rental properties at that time with a decade later, in 2016, after the collapse and recovery back into a seller's market.
In some cities, Trulia found, the percentage of single-family properties compared to a decade earlier is quite a jump. In Detroit, Las Vegas, Memphis, and Fort Lauderdale, single-family rentals jumped by more than 9 percent in the ten years since 2006. Atlanta's numbers climbed almost 9 percent.
Detroit saw the biggest jump. In 2006, nearly 14.7 percent of single-family homes were rentals. Ten years later, the number was almost a full quarter of the city's single-family properties.
Nationally in 2006, 13.2 percent of all single-family homes were rentals. By 2014, that share had grown to 16.9 percent, Trulia reported. These numbers were buoyed by foreclosure sales that jumped from fewer than 350,000 annually before 2007 to a peak of nearly 1.3 million in 2010.
Cities with the highest foreclosure rates also dealt with the deepest employment losses. Detroit and Las Vegas were hardest hit by this particular one-two punch. In Detroit, a foreclosure rate of 14.65 was spurred by an employment loss rate of almost 19 percent throughout the course of the recession. Las Vegas saw about half that employment loss rate, but a foreclosure rate of nearly 30 percent.
However, in terms of investment return, Detroit has seen single-family home values shoot up 162.7 percent, while rents have remained flat, the report stated.
Cape Coral-Fort Myers, Fla. Seems to have handed investors the best returns, though. From June 2011 to June 2018, Trulia reported, home values rose 89.6 percent, while rental rates on single-family homes rose 59 percent.
Three metros, Charleston, Albany, and Rockville, Md., saw drops in the portion of rentals among all single-family homes. All markets were down in single-family rentals by less than a half-percent between 2006 and 2016.