For decades, institutional investors have been major players in the multifamily space. Now they’re turning their attention to detached single-family rental homes — a market segment that traditionally has been dominated by individual owners or small businesses.
Publicly traded companies like Invitation Homes INVH, American Homes 4 Rent AMH and Tricon Residential TCN each own tens of thousands of rental homes.
Real estate brokerages such as Newmark, Cushman & Wakefield and CBRE started focusing on the single-family rental sector as part of their multifamily services a few years ago.
The pandemic caused single-family rentals — which account for half of the rental housing stock — to surge as people moved out of their urban apartments to gain a yard and more space to work remotely.
While single-family rentals gained popularity as the pandemic wore on, demand for them appears to be cooling. Rental rate growth for single-family homes fell to its lowest levels since June 2021, according to a report from CoreLogic, a global property information and analytics provider.
U.S. rental price growth dropped to 8.8% nationwide, the lowest rate of appreciation in more than a year but still three times higher than prepandemic levels, according to the CoreLogic report.
“Single-family rents decreased again on a monthly basis in October but were still up year over year,” said Molly Boesel, principal economist at CoreLogic. “While rents typically experience a seasonal decline in October, this year’s decrease was larger than average and could point to prices slowing more sharply than expected in the coming months.”
Miami led the nation for rent growth for the 15th consecutive month at 16.3%, but gains have slowed dramatically since spring when they hit 40.8%.
“The demand for single-family rentals is unprecedented,” said Jordan Kavana, CEO of Miami-based ARK Homes for Rent. “Our goal is to not only meet that demand but to develop a housing model that embodies good health and well-being for our residents.
The Ark Homes for Rent housing model appears to be resonating with renters. Eighty percent of the company’s tenants renew after the two-year term expires — a much higher rate than the average industry apartment renewal of 57%.
“When you give residents what they want and need and put their health before everything else, you increase the chances that they will remain long-term residents,” Kavana said. “We are loyal to our residents, and in return, they are loyal to us.”
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