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Rise in Rental Stock Indicates Growing Popularity of SFR Market

rentalThe single-family rental market has been gaining popularity in the last couple of years, as indicated by a moderate increase in rental stock.

Na Zhao, Housing Policy Economist for the National Association of Homebuilders, pointed out on the NAHB's Eye On Housing blog on Monday that according to data from the U.S. Census Bureau, rental stock jumped by 1.4 million during a two-year period from 2011 to 2013 up to 40 million. Single-family rental homes made up the largest portion of that stock, with 29 percent.

"Contrary to popular expectations, most rental homes are smaller properties, single-family homes and multifamily buildings with 2 to 4 units," Zhao said.

The period from 2011 to 2013 saw a moderate increase in rental home share across all structure types, except for townhomes. Single-family rental homes (including both detached and townhomes) saw an increase of 3 percent during the two years, while multifamily stock climbed by just 1 percent during the same period.

"However, the increase for single-family rental inventory was not due to initially built-for-rent purposes," Zhao said.

That trend may be changing; with the number of foreclosed properties on a steady decline in the years since the crisis, investors who had previously purchased REO or foreclosed properties cheap and rented them out are looking elsewhere for business. A recent report from NBC News indicated that investors are gravitating toward newly-build homes for the single-family rental market.

Also according to Zhao's blog post, the Census Bureau reported that 85 percent of rental housing stock during the period was located in urban areas (split evenly between central cities and suburbs with 43 percent and 42 percent, respectively).

The mortgage industry has recognized the growing popularity of the single-family rental market. This week at the 2015 Five Star Conference and Expo in Dallas will include the inaugural Single-Family Rental Lab, and Five Star will host the inaugural Single-Family Rental Summit in Las Vegas from October 11 to 13.

Editor's note: The Five Star Institute is the parent company for DS News and DSNews.com.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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