By David Guarino
Senior Research Analyst
John Burns Real Estate Consulting
Take a drive through the urban portion of any major city
and you will likely see cranes and construction crews dotting the landscape, building what appears to be an endless supply of apartment units.
Your eyes are not deceiving you. Construction in 24 of the top 27 apartment markets in the country has eclipsed 24-year historical averages.
Given the declining national homeownership rate and numerous headwinds preventing entry-level buyers from owning a home, one could quickly assume that apartments are now the primary as well as preferred rental choice.
Single-family homes are growing faster than apartments
This assumption would be incorrect, however, as single-family rental homes are growing faster than apartments.
Consider the following:
- 11.3% of all housing units are single-family rental homes (roughly 1 out of every 9 homes).
- The number of single-family rental homes has increased 35% since 2006, to 15.1 million from 11.2 million in 2006.
- Since 2006, 3.9 million single-family homes have become rental properties, compared to 2.9 million newly created apartment units.
While we expect the rate of single-family rental growth to slow as foreclosures slow, we believe the professional operators have a huge opportunity to build an investment-quality income stream out of what used to primarily be a mom and pop business.
For more information, contact our Director of Research Rick Palacios, Jr. or listen to his recent panel Homeownership Trends & Demographic Changes that Impact the Single-Family Rental Market at the 3rd Annual Single-Family Rental Investment Forum held in Miami.