Single-Family Built-for-Rent Market Share Rises

At the start of 2013, single-family starts built-for-rent were up on a year-over-year basis, with the market share rising to a new high.

Despite some recent ups and downs, the share of single-family homes built for rental purposes continues to rise. 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 5.8% for the first quarter of 2013. This is significantly higher than the historical average of 2.77%.

SF built for rent_1q13

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 33,000 homes started during the last four quarters, 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.

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  1. Reblogged this on Ronald Grey and commented:
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  2. In my opinion, the increase in the percentage of new single family starts for rentals is simply a reflection of the uncertainty of the current market. While recent gains have been encouraging, I believe that smart builders will find it very beneficial to take advantage of the red hot rental market and wait until the market recovers sufficiently to allow for a reasonable profit before selling. Although I would not recommend devoting single family starts to this purpose, condos and townhouses should work well. If a builder’s financing permist this, it is a win-win situation. If not, forming limited partnerships for this purpose may prove rewarding.


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