Single-Family Built-for-Rent Construction

The number of single-family homes built-for-rent posted gains over the last year. However, the built-for-rent market is a small portion of the total single-family development, so care must be taken when identifying trends.

According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design and NAHB analysis, the market share of single-family homes built-for-rent, as measured on a one-year moving average, stood at 4.4% of total starts as of the third quarter of 2016. Given the small size of the market segment, the quarter-to-quarter movements are not typically statistically significant. The current market share remains higher than the historical average of 2.8% but is down from the 5.8% reading registered at the start of 2013.

For the last four quarters, single-family built-for-rent starts totaled 34,000 homes. This marks positive growth over the 28,000 estimated for the four quarters prior. This class of single-family construction excludes homes that are sold to another party for rental purposes. It only includes homes built and held for rental purposes.

single-fam_built-for-rent_3q_16

With the onset of the Great Recession and the ongoing declines in the homeownership rate, the share of built-for-rent homes rose. Despite the current elevated market concentration, the total number of single-family starts built-for-rent remains low in terms of the total building market. However, after falling during 2013, the market share has grown over the past year.

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 35% according to the 2013 American Community Survey. As homes age, they are more likely to be rented. Thus, the primary source of single-family rental homes is not construction but the existing housing stock.



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4 replies

  1. With both the multi-family and single family for rent segments showing increases it appears that far too many are choosing to rent rather than buy. The real estate market shows flashes but has not fully recovered after 8 years. I believe the key to the entire problem is the first-time buyer, the most important single segment of the market. It is time to finally figure out what exactly is keeping them out of the market and fixing it. I believe the drastic measures taken by FHA in response to the mortgage market meltdown is the chief reason for the disappearance of the first-time buyer and something should be done about it.

    • John-

      The economy is the single biggest driver of first time home buyers. Recall who these people are- typically aged between 24 and 34. Most are saddled with enormous student loans, graduating from universities with few job prospects, and those hired are often hired at low wages in jobs that dont match their degrees.

      Just paying off the student loan (and more than likely a car loan as well) consumes half their income. Renting is really their only option. Who is willing to take on a 30 yr mortgage, along with all of the other maintenance responsibilities of owning a home (insurance, maintenance, more expansive utility bills, etc) when they can barely meet their more immediate debt requirements?

      When the economy finally shifts into gear, and employers begin hiring workers at wages where they can afford a home (mortgage, utilities, maintenance, etc) you will see the first time home buyer re-enter the market. Fix the economy, you fix housing.

  2. Are their any big developers building for senior rental home market in
    campus developments?

  3. Great article. This really helped me understand more about the ousting market. I own a roofing company, and am always wondering where the trends are going with the roofing contractor industry. I appreciate you putting this down. I have been a roofing contractor for years, and I know for a fact that a lot of the millennial generation will not be able to buy homes due to the amount of debt they are currently under, and I wonder how much his will affect the housing market. Glad I ran into this!

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