Americans are finding homeownership increasingly out of reach, especially for younger families. Unable to purchase a home, they are instead turning to the next closest thing: single-family rentals (SFRs). This strong demographic-driven demand, however, faces a historically low housing supply. With increasing demand and low supply attracting institutional investors to one of the largest asset classes in the world, investments in SFRs are well poised to perform in the future.
THE DEMAND FOR SFRs
Single-family rentals, which combine the benefits of single-family living with the low-maintenance appeal of the multifamily experience, have become the default “starter home” for millions of Americans. As wages fail to keep up with housing price increases, the demand for SFR is forecast to increase, especially among younger adults.
NEARLY 1 IN 5
MILLENNIALS
say they want to rent forever1
63% OF MILLENNIALS
HAVE SAVED $0
for a down payment1
Housing available for rent and sale at
30-YEAR LOW2
In 80% of
U.S. markets, home prices
rising faster than wages3
Home ownership rates
have trended downward over
past 15 years, with greatest decline in
25-44 AGE GROUP4
SFRs are the fastest growing sector of the U.S. housing market,
GROWING TO 11.7% OF ALL HOUSING UNITS SINCE 20055
STRONG DEMOGRAPHICS
Once the driver behind multifamily real estate success, aging Millennials are pushing demand for SFR homes. These renters have higher incomes than the traditional multifamily renters and remain in their home for 3+ years.6
Future Demand for SFR Homes
67 MILLION PEOPLE STRONG
Footnotes
1. RE Journals, Forever renters? Nearly 20 Percent of Millennials not Interested in Owning a Home, February 18, 2021
2. Moody’s Analytics, “Overcoming the Nation’s Daunting Housing Supply Shortage,” March 2021.
3. HousingWire, Home Prices are Rising Faster than Wages in 80% of U.S. Markets, January 10, 2019
4. Joint Center for Housing Studies of Harvard University, The State of the Nation’s Housing, 2018
5. U.S. Census Bureau ACS; John Burns Real Estate Consulting, LLC (Data: 2Q20).
6. https://www.wealthmanagement.com/sfr/why-single-family-rental-investment-works-hnw-individuals
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