There were a lot of great discussions centered upon the Single Family Rental market at the recent Five Star conference, as evidenced here and here. One facet of the SFR “conversation” that’s worthy of our attention is stated well by Chris Crippen: The SFR market is not held up by a single pillar.
Before the moniker “SFR” or “Single Family Rental” was introduced to describe this asset class, it was referred to as “REO-to-Rental”, because…well…that’s all it was. Due to the housing collapse in 2008, REO properties were widely available. Institutional investors were buying up REO properties by the hundreds and thousands and turning them into viable rent-producing properties. And REO properties are still a big part of the SFR market. However, as things have developed it has become evident that multiple factors are supporting the SFR market and its asset class, not just an abundance of REO properties.
Investors aren’t just buying REO properties. They’ve expanded their investment plans to include standard homes for sale on the MLS, so investors are more focused on quality investments rather than just buying properties at the cheapest price possible. Additionally, there are other economic factors playing into this whole scene. Crippen names several: higher mortgage rates, tightening credit standards, rising home prices, student loan debt, etc. And even outside of the financial indicators, there are important cultural characteristics in America that could solidify and add longevity to this market and asset class. The SFR world is not held up by a single, dwindling pillar.