Demand for single-family rentals in the us rises sharply

Demand for single-family rentals in the us rises sharply

The residential sector in US real estate has generally fared well in the pandemic. Even in lockdown, demand for housing continued to grow. However, tight market conditions and ever-rising prices mean that many households are unable to access homeownership. In this scenario, single-family rentals in the US have seen a surge in demand and leases.

 

Expanding market for single-family rentals in the US

The Single-family Rental Market Index (SFRMI) for Q2 this year revealed interesting data for those investors thinking of adding this type of property in their portfolio. Compiled by John Burns Real Estate Consulting and the National Rental Home Council (NRHC), the Index showed a “resilient and expanding market”.

 

Specifically, the SFRMI measures four components including the general index. Any score over 50 indicates a growing market. In Q2 this year, the index as a whole rose to 76.3, up from 62.5 in Q1. This 22% jump reveals a strong market for single-family rentals in the US this year.

 

Rental rates lower than a mortgage

The research also looks at rental rates for single family homes across the country. In Q2, the average stood at US$1,602 a month. This is 4% cheaper than the equivalent monthly payment for a median entry-level mortgage (including insurance).

 

The saving plus the lack of supply on the market generally means renting is often the only viable option for many households. In Florida, for example, supply for single-family homes in Q2 stood at just 2.8 months.

 

Leasing activity up now and in the future

In terms of rental leases, the index showed sharp increases too. In Q2, it rose to 77.2, up from 63.6 in Q1. The figure is the highest in the history of the SFRMI.

 

Looking forward to Q3, the index predicts leasing activity at 74.7, up from 62.6 in Q1. The figures show that single-family rentals in the US will continue to rise this year, according to the property managers included in the survey. Data for the SFRMI comes from 192,000 properties in 51 of the largest metro areas in the US.

 

Occupancy also on the rise

Given the rise in leasing activity, it’s no surprise to discover that occupancy in Q2 rose to 75 The figure is 15% higher than the previous quarter. Property managers also reported that single-family rentals in the US are taking less time to lease. 58% said they were renting properties out more quickly in Q2 compared to 35% in Q1.

 

More supply needed to meet demand

The recent surge in demand for single-family home rentals has put further pressure on the market where supply is already stretched. The NRHC calculates that 3.9 million new rental households have joined the market since 2015. This translates to demand for 1.5 million single-family rentals.

 

The current scenario offers buy-to-let investment potential in key areas of the US. BRIC Group has two options available:

 

Turnkey properties in Florida and Houston, most with 2-year rental guarantees and tenants already in place. Investment starts at US$102,000.

Build to rent single-family homes in Englewood, Southwest Florida. This unique opportunity to buy prime Florida land starts at US$26,500 with the option to upgrade to a build.

 

(Source: Real Estate Consulting)

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