Despite some recent ups and downs, the share of single-family homes built for rental purposes remains higher than historical norms. But by and large, the construction market for these homes remains a niche market, even as rental demand increased in past years.
According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, the market share of single-family homes built-for-rent, as measured on a one-year moving average, stands at 5% for the final quarter of 2012. This is only slightly lower than the recent peak of 5.35% set at the beginning of 2011, and is considerably higher than the 20-year average of 2.7%.
In general, with the onset of the Great Recession, the share of built-for-rent homes rose, with a dip in the share during the homebuyer tax credit period.
Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 28,000 homes started during 2012, but this total has been increasing with the overall growth for housing starts.
Of course, the built-for-rent share of single-family homes is considerably smaller than the single-family home portion of the rental housing stock, which is 27% according to the 2010 American Community Survey. The reason for this is that as single-family homes age, they are more likely to transition from the owner-occupied to the rental housing stock.