The rapidly developing rental housing sector


A detailed report examines the rapid development of the single family home market, the institutionalization of the rental housing market and the emergence of new sub-classifications of these assets.

The study, titled Low Density Rental Housing in America, is a collaboration between RCLCO Real Estate Consulting and the ULI Terwilliger Center for Housing. A summary of the report by RCLCO’s Todd LaRue and Cameron Pawelek uses information from their 20-page report to outline, among other things, the demographic trends and affordability challenges that have led to the growth of purpose-built single-family homes and business metrics and financials within the sector, as well as impact and Forecasts Regarding the SFR Business.

“Demographic change, including the turn of the millennium, which is the prime age at which to start a family, is a major driver of the growth of lower-density housing,” write LaRue and Pawelek. “With the housing market constrained and construction costs soaring, the decline in home affordability is one of the most pressing challenges facing many Americans as the demand for low-density rental housing is increasing.

“Single-family homes benefit from the maturing millennials looking for a new rental product that suits their changing lifestyles, from empty nests looking to shrink to a maintenance-free option, and from the diversity of households in transition.”

As part of this study, RCLCO and ULI analyzed news articles and conducted interviews with various market experts in order to codify the language around the product type and to map the different subsets of SFR according to the authors.

Single-family homes for rent are most similar to individual SFR units, “the report said. The authors say they benefit from economies of scale with a high concentration of units in a single location and cohesive branding with or from a larger master plan community sold and have an average density of three to seven housing units per acre.

According to the report, retail investors account for more than 97% of the existing SFR housing market. These landlords usually own some properties and rent them out through online marketplaces.

LaRue and Pawelek explain the emergence of a greater interest in the market, something Bloomberg also reported earlier this year.

“After the Great Financial Crisis, institutional SFR aggregators emerged and aggregated thousands of houses in different markets, using robust platforms and economies of scale. This group has also started working directly with builders to buy blocks of flats to add to their portfolio as the resale housing stock has tightened. The newest group is the purpose-built SFR or Build-for-Rent community, where the entire community is planned and built as a rental apartment and thus has consistent branding, quality of living and often offers on-site resources such as leasing services, property management and amenities. “

The main target group for BFR SFD homes are family households, typically in a transition period after moving to a new market or during home construction, with mature professionals and empty nests being the secondary market target group, the authors reported.

How DS news As reported several times as early as 2021, build-to-rent apartments, the sector of which has remained stable in recent years with a low market share, have potential for immediate growth due to several factors that play a role in today’s market. The study by the RCLCO / Terwilliger Center also showed an influx of investments and transactions in SFR over the past 18 months. On the downside for mom-and-pop investors, the researchers say the continued demand for the SFR product from institutional investors could lower cap rates under some garden apartments in the near future as more investors seek to add SFR to their portfolios .

Another potential downside to inbound SFR assets like build-to-rent is the potential equity impact, the report said.

“In terms of affordability, the higher price of some low-density rental apartments could contribute to income segregation. In addition, if they can, investor buyers can create home ownership barriers (affecting equity and economic mobility) in some markets. Consistently compete with individual first-time home buyers to resell existing homes, they report. “

They propose a zoning and land use policy that, among other things, supports mixed income and mixed ownership opportunities for residents.

The report’s authors conclude that “while low-density rental housing is unlikely to resolve the country’s significant affordability crises, providing more housing options to meet the needs of a wide variety of American households is a positive step forward.”

The 20-page report is available from In addition to the LaRue and Pawelek already mentioned, Adam Ducker, Ryan Guerdan, Liam Mercer and Patricia Bacalao wrote the study.


Investors in build-to-rent communities and homes, as well as all single-family rental investors, are encouraged to attend this fall’s Single-Family Rental and Investment Roundtable, which is part of the Five Star Conference and Expo 2021, which runs from 19th to 17th September September 21st at the Hyatt Regency Hotel in Dallas, Texas.


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