Single-family home rentals since the housing bubble burst nearly a decade ago have seen massive growth, according to a new look from Mark Zandi, Moody’s Analytics’ chief economist.
Some 7.5 million households will have lost their homes and nearly all of them have since become renters – many of single-family homes similar to the ones they owned previously.
“The single-family rental market has enjoyed a strong run in recent years. Demand has been fueled by the foreclosure crisis and declining homeownership. Many families displaced by the crisis much preferred to rent a single-family home over an apartment. Prospects for continued strong single-family rent growth are good,” Zandi says in a client report.
Among his findings and forecast are that single family rent growth will accelerate this year and average about 3% per annum through the end of the decade, as the foreclosure crisis plays out and homeownership remains under pressure.
“The foreclosure crisis is still playing out and homeownership is likely to remain under pressure until later in the decade. Rents are also low relative to house prices in many markets across the country,” Zandi says. “Whether the single-family rental share of the housing stock continues to increase largely depends on how millennials ultimately view renting a single-family home over owning their own home or living in an apartment.”
The single-family rental share of the entire housing stock has increased by 44% from just over 9% a decade ago to more than 13% today.
(Source: Moody's Analytics)
As a share of just the rental housing stock, single-family rentals have risen from 30% to 36% over the same period, while the apartment share of the housing stock, for both those with two to four units and those with five or more units, has fallen commensurately.
Single-family renting is especially prevalent in the western and southern U.S, where rents also appear somewhat overvalued compared with where they should be in the long run given house prices and interest rates.