Jake and Stephanie Murphy will move to a new single-family rental home built by American Homes 4 Rent.
Diana Orrick | CNBC Real Estate Correspondent
With the surge in demand for single-family rental homes, landlords are jumping into the homebuilding business to support the declining supply.
Push comes because more Americans have the flexibility to work from anywhere and are looking for a larger space with an outdoor area.
“This market is very undersupplied. There aren’t enough quality homes for the number of American families,” said David Singelyn, CEO of American Homes 4 Rent, which has built over 100 rental-only communities over the past five years. I am saying.
According to the National Association of Home Builders, 13,000 new single-family homes were launched for rent in the first quarter of this year, up 63% year-on-year. According to the association, rental housing still accounts for only 5% of the home building market, up from an average of 2.7% in the past.
Located in Mooresville, NC (about 30 miles north of Charlotte), the latest development of American Homes 4 Rent includes more than 220 rental homes with facilities such as pools and fitness centres. Landscaping and maintenance are included in the rent.
Jake and Stephanie Murphy, who have been able to work remotely since the pandemic, are among those who moved to the community after selling their homes in California. They could afford it, but chose to rent a four-bedroom home for their family for $ 2,400 per month.
“I’m not sure if home prices will actually stay at current levels, so I didn’t want to buy at peak times and let them fall a few years later,” said 29-year-old Stephanie Murphy. ..
Murphy’s also said he likes the flexibility of renting when learning about new areas.
The number of rental properties is currently declining slightly as some small landlords sell their homes at the top of this expensive market. However, Mr. Singerin hopes to continue building rental housing for the next few years, based on the rising demand he said he is seeing.
“How many inquiries? How many shows? How many applications are there in every house available? Today is two to three times more than two years before the pandemic,” said Singelyn. I am.
Other companies investing in the rental build market Including Renner, DR Horton, Taylor Morrison, Tall Brothers. Invitation Homes, the largest publicly traded landlord, launched a joint venture with homebuilder Pulte Homes last year to build more rental homes.
Both buying old homes and building new homes have dramatically increased investment in single-family home leasing. According to John Burns Real Estate Consulting, the sector’s investment in 2020 was approximately $ 3 billion. In 2021, this figure surged to $ 30 billion. It is expected to reach $ 50 billion this year as large institutional investors, homebuilders and landlords enter the market.
Like most landlords, American Homes 4 Rent entered the business during the Great Recession, when millions of homes were seized. The company got cheap and needy properties, often in the auction block, and turned them into lucrative rental properties.
In 2006, the last peak of housing, there were 11.6 million rental households. According to John Burns Real Estate Consulting, that number rose to 15.5 million in 2014 after the housing market collapsed.
However, increased demand and tight supply also mean that affordable rental housing is falling. According to CoreLogic, rents for single-family homes nationwide have risen by more than 13% since a year ago.
Molly Boesel, Chief Economist at CoreLogic, said: She said the number of single-family rental properties listed earlier this year is well below pre-pandemic levels.
Returning to Mooresville, North Carolina, Murphy’s is watching how the market evolves. But Jake Murphy said he doesn’t think his home is part of the American dream and is enjoying renting for now.
“I’m excited because you look around the neighborhood. There’s something like a Texas license plate or New York, and then we have California,” he said.