9 Single-Family Rental Statistics To Know For 2021
If there’s one factor anyone can pull out of 2021’s real estate market, it’s that single-family rentals are where it’s at. Everyone wants a single-family home today, but not everyone can afford one, opening many possibilities for investors.
Check out the top 9 single-family rental statistics you must know. If you haven’t jumped into single-family home investing yet, you will when you see how well the industry is booming.
1. Single-Family Homes Meant for Rentals Construction Rates Increased by 35,000 Since 2009
This last decade has seen an incredible increase in single-family homes built for renting. In 2020, 49,000 single-family homes were built as rentals. Compare that to the 14,000 built in 2009, and you can see how much the industry is changing.
While 49,000 single-family homes for rentals only make up 4% of the total housing market, it’s still a significant number that surpasses almost all previous years, except right after the housing crisis in 2009 and 2010.
The increase in rentals means more people are renting than buying, giving investors plenty of room for expansion and growth.
2. Single-Family Rents Are up 5.3%
According to a study conducted by CoreLogic, single-family home rent prices increased 5.3% year-over-year. Experts state this is the largest increase we’ve seen in the last decade and a half.
Comparing the rental price increase from just one year ago, April 2020 saw a 2.4% increase year over year, which signifies a significant rise in rental demand in 2021, causing prices to soar.
The demand is likened to a couple of factors:
The unaffordability of single-family homes for many families who faced unemployment and other devastations during the pandemic.
Housing inventory shortages, leaving would-be buyers without the ability to buy a home.
Single-family homes also became more attractive for families who already rented. Families living in multi-unit properties suddenly found themselves wanting more space. It also means no more sharing common areas, including laundry rooms and elevators, crucial during a medical crisis.
3. Single-Family Occupancy Rates Are Up
Single-family occupancy rates are up 20 bps year-over-year. This is likely due to the higher demand for rentals rather than purchases while the economy and families recover financially from the pandemic.
Looking quarter-over-quarter, occupancy rates are down 40 basis points from the first quarter of 2020, but they still sit at an impressive 94.5% occupancy rate. Traditionally, occupancy rates fall in the first quarter, as they did in 2018 and 2019, so the slight dip in 2021 isn’t anything to be alarmed about.
If anything, it’s a great time for investors to expand their portfolio with single-family rentals to meet the market demand as it will likely continue increasing if the trends continue. Roofstock Marketplace is a great platform to find the most affordable and profitable rental homes available.
4. Phoenix Had the Fastest-Growing Rents in the United States in 2021
Of the hottest 20 metro areas in the United States, Phoenix had the fastest growing single-family rents year-over-year with an increase of 12.2%. Closely following the Phoenix market was Tucson (10.6%) and Las Vegas (9.3%).
Areas with decreasing rents in the first quarter of 2021 include Boston, MA (-5.9%), and Chicago (-2.6%).
Even in the areas that rents fell, though, demand is high, and rents are bound to keep increasing as the demand increases.
It’s a great time for investors to invest in some of the hottest metro areas, and if you use Roofstock Marketplace, you can get your hands on some of the hottest investment properties to help you expand your portfolio.
5. The Average Annual Gross Rental Yield Is Down for Single-Family Homes in 2021
According to ATTOM Data, the average annual gross rental yield on single-family homes fell to 7.7% versus 8.4% in 2020.
The gross rental income is calculated by determining the average annual gross rental income divided by the median single-family home purchase price. There are many reasons this could happen, but the most agreed-upon points are the rising home prices, increased interest rates, and stable rent rates.
These numbers are expected to increase as the economy continues to recover and landlords no longer have to abide by the moratoriums.
6. The Need for More Room Opens up More Suburban Opportunities for Investors
Investors looking to invest in single-family homes in suburban areas have a great outlook. As families look for more room, especially as people continue to work from home, the areas that have seen the greatest inbound growth include:
Oregon
South Dakota
Arizona
Idaho
According to a study conducted by Atlas Moving Lines, families moving to these areas did so because of job relocations or to take on a new job.
7. Families Want More Room
Families with children are much more likely to choose a single-family home over a multi-family home because they want the room. According to the Joint Center for Housing Studies, 75% of rentals had three or more bedrooms versus 11% of recently rented multi-family properties.
As the pandemic continues and the possibility of working from home and even doing school remotely increases, families want room for everyone to spread out and have their own space. With fewer activities to do or places to go, families spend more time in their homes and want the space to spread out.
8. Gen Z Wants Single-Family Homes, Unlike Its Previous Generations
A study conducted by Satisfacts/ApartmentRatings for NAA in November/December 2020 on multigenerational renters showed Gen Z and millennials all want single-family homes once they graduate versus apartments.
This opens up even more doors for investors. If the younger crowd wants single-family homes, most won’t be able to afford to buy one themselves, at least for a couple of years. Investors able to buy single-family homes and rent them out will do well in the coming years as more Gen Z and millennials graduate college and start their adult life.
9. The Apartment Rental Industry Is Expected to Decline 3.9% In 2021
If investors need any more reason to invest in single-family homes, consider this. The apartment rental industry is expected to decline almost 4% this year alone. This is further proof that Gen Z and millennials want single-family homes.
Young families want more freedom and room, and even those just starting out want to get right into a home, where they are free to be themselves and enjoy life without the restrictions apartments create.
How to Invest in Single-Family Homes
Now that you know the statistics and you see the trends, it’s time to determine how you’ll invest in single-family properties.
Many people start by house hacking or buying a multi-unit property. They live in one unit and rent out the others. Most mortgage programs allow borrowers to use owner-occupied financing for these situations, making it easier for investors to get started.
But that’s not where the target market is today. They want single-family properties, which, fortunately, there are plenty of opportunities to invest in when you do it right.
Roofstock Marketplace makes it easy for anyone to invest in their first or subsequent single-family home. Here’s how it works.
Search for your property on the Roofstock platform. You can tailor your search by applying filters to narrow down your options. If you don’t see a property that meets your needs, set up automatic alerts so you’re the first to know about available properties.
Learn everything you can about the property. Here’s where Roofstock really shines. You aren’t left on your own to figure out if a property is a good investment. They do all the research and due diligence for you. You have to read the data and figure out if it makes sense for your situation.
On Roofstock, you’ll find pictures and videos, property inspection reports; title reports; insurance quotes; cost estimates; profit estimates, and rental estimates. You’ll also get plenty of information about the neighborhood and the likelihood of keeping the property occupied.
Make an offer through the platform. Once you find a home you want, you can make an offer right through the platform. Like would happen in a traditional sale, the seller has the option to accept, counteroffer, or decline your offer.
If the buyer accepts your offer, you pay 0.5% of the sales price to use Roofstock. If the seller doesn’t accept your offer, it costs you nothing.
You go through the closing process like normal. You’ll provide your lender with the information about the property so they can underwrite the property and clear any personal conditions you have left.
When you’re ready to close, Roofstock helps you through the process. In the end, you are the proud owner of a new home.
Roofstock not only makes it easy to find rental properties, but there’s an added bonus.
Most Roofstock properties have renters in them already. Sellers sell properties mid-lease, giving you the tenants and lease when you buy the property. This is an incredible bonus because you don’t have to waste time and energy finding tenants, screening them, and filling the property. You earn cash flow from day one.
The Bottom Line
2021 is the year of the single-family rental. If you haven’t jumped on the bandwagon yet, it’s time. This is the year a majority of renters want more space. They are the families that can’t afford to buy a home but want to live in one, so they don’t have the restraints of apartments or multi-family properties.
Roofstock Marketplace makes it easy to buy single-family homes throughout the United States. They’ll even match you up with property management companies if you find a house outside of your state. Sometimes it’s cheaper to invest in another state and pay a management company to handle the rental for you, and Roofstock helps with it all.
Image by Public Co from Pixabay
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