President Biden’s release in May of a “Housing Supply Action Plan” represents a commendable effort to bring much needed quality, affordably-priced housing to communities throughout the country. In taking steps to “ease the burden of housing costs over time” the administration has presented a legitimate framework to address the supply constraints that have been at the forefront of the U.S. housing market for so long. Importantly, the administration’s plan recognizes the need for a multi-faceted approach that engages a variety of relevant stakeholders and housing providers, with the ultimate aim of ensuring all Americans have ready access to a suitable range of housing opportunities, both in the owner-occupied and rental housing markets, to include the market for single-family rental homes.
Though the business of renting single-family homes has existed for as long as anyone can remember, the single-family rental home industry as we know it today—comprised of companies large and small, owners and builders, operators and vendors—has brought structure and organization to the housing market’s large but decentralized middle ground between homeownership and rentership. Contrary to alarmist claims of “large institutions” buying homes with abandon, individuals and small, local businesses own more than 90 percent of the nation’s single-family rental homes.
Large companies, on the other hand, account for just a small share of the market. Member companies of the National Rental Home Council, which include the nation’s leading providers of single-family rental homes, collectively own about 300,000 properties. This represents just 0.2 percent of the more than 140 million residential housing units in the US and less than 1.5 percent of the country’s inventory of 23 million single-family rental homes.
Even in markets where NRHC large member companies have higher concentrations of properties, they still account for a small share of homes. In 23 states, NRHC member companies don’t own a single property and in no state do companies own more than 1 percent of the residential real estate or 5 percent of the number of single-family rental homes. In fact, providers of single-family rental homes are more likely to invest in markets characterized by strong underlying population and employment growth, factors that tend to be highly correlated to the demand for rental housing.
Regarding the notion that providers of single-family rental homes impact local rates of homeownership, again the data is less than conclusive. In many markets where NRHC member companies have higher concentrations of properties, rates of individual homeownership have been on the rise in recent years. According to U.S. Census Bureau data, Charlotte, N.C. has seen the rate of homeownership across the metro area increase from 65 percent to 75.5 percent between the first quarters of 2017 and 2022; the rate in Atlanta during that period has increased from 64.4 percent to 67.6 percent; Nashville from 71.1 percent to 75.2 percent; and Phoenix from 62.7 percent to 67.2 percent. Nationally, the number of owner-occupied housing has increased more than 10 percent during that five-year timeframe while the number accounted for by rental housing has grown just 2 percent. Further, in terms of home prices, in seven of the ten states with the highest rates of home price appreciation in 2021, NRHC member companies don’t own one property. Yes, these are only select markets, however, the data from these examples show rates of homeownership and home price appreciation are clearly influenced by factors beyond whether single-family rental home providers have a presence in those markets.
Finally, and most importantly, providers of single-family rental homes are committing significant resources to local markets for one reason: demand. According to Harvard’s Joint Center for Housing Studies, the number of renter households in the U.S. increased by 870,000 during the COVID pandemic. To meet this demand, providers of single-family rental homes are investing in local staff, hiring local contractors and business partners, and bringing property management expertise to local markets all to ensure a positive experience for residents and families who choose a single-family rental home lifestyle. As evidence, NRHC member companies invested nearly $2 billion in home renovations, upgrades, and other property-level operations in 2021.
The continuing development and maturation of the industry is about one thing—providing a viable source of stabilized long-term single-family rental housing responsive to the needs and lifestyle preferences of today’s housing consumer. To get there, the industry is becoming more accessible, more transparent, more consistent, and more relevant. This is a positive for those who have decided renting a single-family home is in their best interest. Local housing markets should reflect the diversity of needs and circumstances of all Americans, both homeowners and renters. As testament to the role of single-family rental homes in neighborhoods and communities, a report by AARP in 2021 found, “the most livable neighborhoods offer the most diverse set of housing options, including multifamily and rental opportunities as well as single-family and owner-occupied homes.”
Recent attention on the role of single-family rental home companies has served to provide legitimate inquiry into the changing dynamics of today’s housing market. However, coverage of the industry that portrays single-family rental home providers as nothing more than buyers and sellers of single-family properties misses the real story: America’s housing market is evolving in significant ways, and the emergence of single-family rental home companies is a response to that evolution.
Excerpt David Howard, executive director, National Rental Home Council