After the housing downturn, institutional investors were “first responders” on the market crash scene, preventing asset prices from plummeting further. As the economy improved, the single-family rental market responded and evolved. Analysts forecast continued growth as issues related to economic factors, inventory availability, and the demographics of prospective buyers influence the market.
“The single-family rental market expanded during the Great Recession, and, as of 2013, represented 35 percent of all rented housing units in the U.S. The growth in foreclosures increased the number of vacant single-family homes. At the same time, the reduction in the availability of mortgage credit left many families unable to purchase a home. As a consequence, many previously-owner-occupied homes became rentals.” Freddie Mac Economic & Housing Research, January 2016 Public Outlook
There were over 42.6 million renter households in 2015 and projected to increase with the influx of millennials and baby-boomers into the rental housing market.
“Although initially ignited by the bust in housing and mortgage markets, rental growth is likely to remain strong as members of the huge millennial population enter the housing market. According to the latest JCHS projections, individuals that are currently under age 30 will form over 20 million new households between 2015 and 2025, and most of these households will be renters.” 2015 Harvard study
Reasons to Rent
- Flexibility to respond to relocation (job-related and by choice)
- Financial freedom
- Avoiding risk with the market
- Credit availability and cash position to afford down payment
- Budgeting consistency
Strong rental markets drive the overall health of the industry, providing inventory, local jobs, local income and taxes and revenue
Neighborhoods are rehabbed and abandoned homes are occupied which stabilizes or appreciates home values.