While homeownership has always been the American dream, there are millions of families in the United States who believe home leasing is equally dreamy. In fact, the National Rental Home Council (NRHC) indicates that there are more single-family homes for rent—23 million—than there are apartment units, at 20 million.
Recent statistics from the nonprofit, which represents the interests of the single-family rental industry, show a total of 140 million housing units throughout the nation, of which 100 million are single-family homes. The remainder include apartments, condos, co-ops, or multi-family homes.
Of the 23 million rental homes, approximately 1.5 percent are owned by single-family home rental companies, while the vast majority are owned by individual property owners. The NRHC’s roster includes hundreds of large firms as well as “mom and pop” owners with one or two properties.
“Single-family home rentals have existed for many years, particularly in the Midwest, Southeast, and Southwest, but lately we’ve seen an uptick in the market driven by millennials without children,” David Howard, NRHC executive director, told The Epoch Times. “This generation tends to put off having children or buying a home until later in life.”
With today’s skyrocketing home prices throughout the country, many people have become more comfortable with renting.
“Generally, renting a home is less expensive than buying and having to come up with a hefty down payment,” Howard says. “Renting is also becoming more the norm. People can rent cars, furnishings, and even clothes, so the trend seems to be spilling over into the housing market.”
While apartment rentals in or near major cities tend to be more costly, single-family homes in suburban areas are usually less expensive.
“It used to be that you rented because you couldn’t afford to buy, and while that’s true in some cases, many people are renting by choice,” Howard said. “They’re either priced out of the market, or they’re deciding to wait until prices come down, or maybe they don’t intend to stay in one location for a long period of time.”
As a continued result of COVID-19, Howard noted, many people are still working from home, and renting allows them to have that extra bedroom or a backyard.
A September report by the National Association of Realtors indicates the median existing-home sales price was $356,700, an increase of 14.9 percent from August. This also marks 114 straight months of year-over-year gains. The housing inventory remains low, with 1.29 million units nationwide at the end of August, down 1.5 percent from July, and down 13.4 percent from one year ago.
The trend toward single-family home rentals has also ignited new business opportunities for investors. “We’re starting to see more corporate ownership in certain parts of the country, particularly where there’s been a lot of job growth and migration such as Atlanta, Nashville, Dallas, and Phoenix,” Howard said.
One of the main benefits of the emergence of corporate ownership is providing property management services to renters. This can include everything from landscaping to appliance repair, to roof maintenance.
One of the leading asset managers for institutional owners of single-family homes is Atlanta-based RESICAP. Founded in 2010, RESICAP now has more than 500 employees throughout the country.
“We started to see an increase in single-family home investments in 2008 during the first housing crisis,” Andy Wu, director of acquisitions at RESICAP, told The Epoch Times. “A lot of Wall Street firms began buying properties at foreclosure auctions, and this was a new experience for some who had never before entered the single-family home market. Since that time, we’ve seen a lot of other investors and private equity firms purchasing large numbers of homes as rental properties.”
RESICAP works directly with these investors to focus on the areas for purchase, renovate the homes with its own construction firm, then prepare the homes for the rental market. The firm markets the properties on its own website, as well as others, such as Zillow.
“We help our property owners build a portfolio that will generate a return on investment for the next five years or more,” he said. They provide tenant screening services as well.
Currently the company operates in 15 markets, with a concentration in Georgia, Florida, North and South Carolina, Texas, Oklahoma, and North Dakota.
“We typically deal with long-term renters,” Wu said. “Most of them are actually able to afford to purchase a home, but they don’t want to be tied down to something and have to worry about constant home upkeep and repair.”
The company forms partnerships with investors on both the lower end—with up to 100 home purchases at a time—or the higher end, with 10,000 or more acquisitions at a time.
“We’ve definitely seen an upswing in business. Typically, we had been averaging 200 to 300 transactions a month, but now we’re up to 500 or 600,” he said.
Echoing Howard’s comments, Wu believes renters appreciate the flexibility of having a newly renovated, single-family home that they don’t have to maintain themselves.
“It’s basically hassle-free living,” he said. Renters typically spend three to five years in these homes before moving to another location or making a purchase.
“I think we will see this trend continue,” Howard said. “But I don’t think home rentals will ever outnumber home purchases.”