The New Giant in Rental Housing: Single-Family Rentals

January 2, 2019

The single-family rental market has become big business and now compromises the largest source of rental housing in the U.S., according to a new white paper from Freddie Mac. Single-family rentals make up about half of the overall rental market, and it is the single largest segment of the rental market by valuation and households served.

A young girl and her pets looking out a living room window

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The single-family rental market provides housing to 25 million Americans. It fills a particularly vital role in rural areas, in which it accounts for two-thirds of the rental housing stock, according to Freddie Mac’s paper, “Single Family Rental: An Evolving Market.”

“The single-family rental market is an important segment of the housing market and the data reveal it to be an affordable housing option for many American families,” says Steve Guggenmos, vice president of multifamily research and modeling. “Much of the SFR market is primarily driven by small investors, and there is not a uniform set of terms and credit standards for loans on SFRs.”

Indeed, small investors dominate the single-family rental space. Their portfolios consist of anywhere from one to up to 50 properties. A “slow growing” middle-tier investor market (with a portfolio between 50 to 2,000) has the potential for growth over the next few years, Freddie Mac’s paper notes.

Freddie SFR. Visit source link at the end of the article for more information.

Researchers also note a shift in concentration in single-family rental housing toward the southeast and away from the high-cost northeast and west coast markets, as well as less concentration in rural markets.

Freddie Middle tier. Visit source link at the end of the article for more information.

© Freddie Mac

The top five metros by count of single-family rentals are:

  • New York
  • Los Angeles
  • Chicago
  • Philadelphia
  • Dallas