Big landlords jump into the homebuilding business as demand for single-family rentals surges
June 10, 2022 | Diana Olick | CNBC
As demand for single-family rental homes surges, big landlords are jumping into the homebuilding business to shore up falling supplies.
The push comes as more Americans have the flexibility to work from anywhere and are looking for larger spaces with outdoor areas.
“This market is very undersupplied. There are not enough quality homes for the number of American families,” said David Singelyn, CEO of American Homes 4 Rent, which has built more than 100 rental-only communities in the last five years.
According to the National Association of Home Builders, there were 13,000 new single-family homes started as rentals in the first quarter of this year, up 63% from a year ago. Homes-built-for-rent still represent just 5% of the home building market, but that’s up from the 2.7% historical average, according to the association.
In Mooresville, North Carolina – about 30 miles north of Charlotte – American Homes 4 Rent’s newest development includes more than 220 rental homes with access to amenities including a pool and fitness centers. Landscaping and maintenance is included in the rent.
Jake and Stephanie Murphy, who’ve been able to work remotely since the pandemic, are among those who relocated to the community after selling their home in California. They could afford to buy, but opted to rent a four-bedroom home for their family for $2,400 a month.
“We’re just not sure if the housing prices will really stay where they are currently. So we didn’t want to buy at the peak and then have them go down in a couple of years,” said Stephanie Murphy, who is 29.
The Murphys also said they liked the flexibility of renting as they learn about a new area.
The number of rentals is now falling slightly, as some smaller landlords sell their homes at the top of this pricey market. But Singelyn expects to keep building homes for rent over the next few years based on the strengthening demand he said he’s seeing.
