Using the 2018 Rental Housing Finance Survey (RHFS) published by the US Census Bureau, this post examines the characteristics of rental housing in the United States. The RHFS provides measures of financial, mortgage, and property characteristics of rental properties in the US on a current and continuous basis.
The 2018 RHFS survey shows that there are 19,955,000 rental properties in the US. Figure 1 details property acquisitions since 2000. A total of 1.9 million units were acquired for rental purposes between 2000 and 2004, 3.0 million between 2005 and 2009, 1.8 million from 2010 to 2012, 2.1 million from 2013 to 2015, and 1.0 million from 2016 to 2018.
The majority of rental properties in the US – 86 percent – are single-unit properties, 12 percent are 2 to 4-unit properties, 2 percent are 5 to 24-unit properties, and the remaining 1 percent are properties with 25+ units (Figure 2). The median number of units on a rental property is one.
Of the 19 million plus rental properties in the US, the majority – 72 percent – are owned by individual investors, 16 percent by LLPs, LPs, or LLCs, and 4 percent by trustees for estates. Five percent of properties have some ‘other’ form of ownership and 3 percent did not report their ownership type (Figure 3).
Market Value and Investment Returns
The median market value of rental properties was $130,000 in 2017 and the median purchase price was $84,900 (Figure 4). The median purchase price to market value ratio of properties in the RHFS was 81 percent, indicating that rental properties have equity.
Also included in the RHFS are various measures of return on investment for rental properties. The measures are often used to help determine the expected return a property will yield. The capitalization rate, for example, is the share of a property’s gross income less its expenses divided by its market value. Higher rates generally signal better returns, but it is important to note that capitalization rates vary widely by industry and there is no solid consensus on what constitutes a ‘good’ or ‘bad’ return. The RHFS shows that the median capitalization rate for all rental properties was 4 percent in 2017 (Figure 5).
Another measure often used to evaluate a rental property investment is the gross rent multiplier, which is calculated by taking a property’s market value over its gross rental income, with lower values indicating a higher return. Rental properties had a median multiplier of 8 in 2017.
In conclusion, the RHFS contains a wealth of information to better understand the rental housing market in the US. In addition to this post, look out for a future post that will examine rental housing debt and financing characteristics from the 2018 RHFS survey. To further explore the RHFS, the survey can be accessed here.
The 2018 RHFS survey was conducted in spring and summer of 2018, with a 2017 reference year.
 Starting with the 2010 to 2012 acquisition period, the RHFS grouped property acquisitions in 3-year intervals, instead of 5-year intervals (2000 to 2004, 2005 to 2009).
 Calculating the gross rent multiplier does not take expenses into account like the capitalization rate.