The multifamily industry may see more competition from investors holding single-family rentals as more distressed properties are rehabilitated and prepared for tenants.
About 16.1 percent of multiple listing service entries are rentals, according to Real Estate Economy Watch, more than twice the proportion in 2006. The single-family rental business is worth about $3 trillion and continues to grow. About 21 million rental homes account for more than half of the rental units available on the market, data from CoreLogic indicates. Further data is difficult to analyze because most economists and industry specialists are not used to tracking it, the news source notes.
"Single family rentals are very distinct from multifamily and they behave very differently," said CoreLogic economist Sam Khater in a recent interview. "For example, on a per unit basis, rents for single-family rentals run 1.5 to 1.6 times higher than multifamily."
He added that the supply of single-family rentals has been smaller than that of homes for sale, with high demand leading to an increased rate of closings.
Rental property management firms may be able to expand into this space. Either way, they should prepare for the impact this growing trend is having on the market as more renters are not looking to apartments for housing.