Opinion: SFR companies not to blame for lack of inventory

A recent article, “Stop subsidizing Wall Street buying up homes,” perpetuates an uninformed stereotype of single-family rental home companies while revealing a serious neglect for the important contributions industry firms bring to today’s housing market.

Contrary to their portrayal as indiscriminate buyers of properties far and wide, providers of single-family rental homes are working diligently to respond to the demand for quality, affordably priced rental housing in safe, well-located neighborhoods. Single-family rental home companies — large and small — are committed to the communities in which they invest and build by providing families with more options for housing to meet the needs of local residents.

The claim by the authors that single-family rental home companies “swoop up much of the inventory” of homes from potential homebuyers is, in fact, not supported by the data in any way, shape, or form. Rather, large companies own less than 1.5% of the 23 million properties that comprise the market for single-family rental homes and only 0.2% of the nation’s total housing inventory.

According to National Rental Home Council (NRHC) data, member companies do not own more than 1% of the housing in any individual state. This point was highlighted recently in a Freddie Mac report dated June 6, 2022, which concluded, “investor purchases are only modestly elevated and are of secondary importance to first-time buyers,” and that corporate owners “remain so small that their market share only has a modest impact on the overall percentage of investors.”

The Freddie Mac report also found that purchases by large institutions “have only been about 4% of the market since 2021.”

In terms of the impact on young and first-time homebuyers, the National Association of Realtors (NAR) found in a 2022 report, “millennials now make up 43% of homebuyers – the most of any generation – an increase from 37% over the previous year.”

Suggesting single-family rental home companies have anything to do with the remarkable pace of home-price appreciation of the past few years ignores the real issue driving the cost of housing: supply. According to NAR, the United States faces a housing deficit of 6 million units. This, at a time when there are 18% more people (6.6 million) in the prime household formation years of 25 to 34 than there were in 2006.

The age-old laws of supply and demand are driving home-price growth, not the purchase activities of large single-family rental home companies. Indeed, in seven of the top 10 states for home price appreciation in 2021, the largest single-family rental home companies own a grand total of zero properties, a fact referenced in a recent CoreLogic research report which found no strong relationship between the presence of investors and home price appreciation, noting “correlation does not imply causation.”

Finally, ongoing supply challenges in the owner-occupied housing market are arguably as severe as in the rental housing market. Census Bureau data show while the amount of owner-occupied housing has grown by over 11% during the past five years, the amount of rental housing has grown by less than 1.5%. These growth discrepancies have led to a situation where the share of rental housing today (30.9%) is less than it was five years ago (31.8%).

In fact, in many markets where NRHC member companies have higher concentrations of properties, rates of individual homeownership have been on the rise in recent years. Charlotte, North Carolina, has seen the rate of homeownership across the metro area increase from 65% to 75.5% between the first quarters of 2017 and 2022; the rate in Atlanta during that period has increased from 64.4% to 67.6%; Nashville from 71.1% to 75.2%; and Phoenix from 62.7% to 67.2%.

Single-family rental home companies are investing in local staff, hiring local contractors and business partners, and bringing property management expertise to local housing markets all to ensure a positive experience for residents and families who choose a single-family rental home lifestyle. NRHC member companies invested nearly $2 billion in home renovations, upgrades, and other property-level operations in 2021, and each of NRHC’s five largest member companies maintain an A+ rating from the Better Business Bureau.

Local housing markets should reflect the diverse needs and circumstances of both homeowners and renters who call those markets home. As testament to the important role of single-family rental homes in neighborhoods and communities, a report by Harvard’s Joint Center for Housing Studies and AARP in 2021 found, “the most livable neighborhoods offer the most diverse set of housing options, including multifamily and rental opportunities as well as single-family and owner-occupied homes.”

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

David Howard is executive director of the National Rental Home Council.

To contact the authors of this story:

David Howard at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

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