3 Takeaways from the Single-Family Rentals Conference
May 20, 2021
Last week, a handful of Streetsensers attended the Single-Family Rental Summit in Dallas. As most have heard by now, the stunning rise in demand for single-family rentals has redefined the real estate landscape. Top subject-matter experts led discussion panels that dove into the investment landscape and future of this rising asset class — check out our top takeaways:
COVID was a driver, but build-to-rent SFR community deliveries will continue to rise well after the pandemic is over. Rents for single-family homes hit a 14-year high as of March 2021, and subsequently so have rents (up 4.4% YoY). The super-high consumer demand — coupled with building challenges due to the steady rise in commodities like lumber — has created a truly unique economic environment that, for the first time, has put single-family rentals at the top of the real estate heap. Since the pandemic hit in March 2020, single-family rentals are up 66% — stunning growth for a previously low-key asset class. With Millenials continuing into adulthood, with children and pets now, it’s clear that the single-family rental market will continue to grow even past the pandemic.
Secondary cities are primed for the single-family rental boom – secondary and tertiary markets where it’s significantly more affordable to develop the land, like Cleveland, Baltimore, and Cincinnati, stand to gain a lot in the move toward single-family rentals. There’s also a suburban shift among millennials, vacating cities and looking for more room, outdoor space, and lower cost of living. Lastly, the high gross rental yields for secondary markets make it a wise investment choice.
Millennials movement to single-family rentals is driven by a number of reasons:
– Millennials are deferring mortgages: While millennials are behind their parents in terms of how much wealth they’ve amassed by a certain age, the last handful of years have been beneficial for them: from 2016-2021, older millennials (born in the 1980s) increased wealth by 80%. This has led to a generational group that may be ready to invest in more rent, but not quite ready to take on a mortgage.
– Relatively recent work-from-home trends are driving millennials to seek more space: Once cities shut down during COVID-19 stay-at-home orders, cities lost some of their appeals. Urban and suburban Millennial renters cooped up at home with their families, pets, and office all in one place looked around for more space.
– Desire for maintenance-free living: Many millennials aren’t ready to be their own property manager — with cash being tight, the draw of maintenance-free living within a standalone home is appealing.
Stay tuned for more insights into the single-family rental market, and don’t miss our recent piece on designing amenities for the future.