Since COVID, real estate investors have hesitated to make a significant play. Many are waiting on the sidelines, observing the market and looking for an entry point. What challenges do they face in the single-family rental housing market? Where should they look for opportunities?
During IMN’s SFR West conference, we exchanged insights with other industry leaders to better understand the market and create a portrait of the SFR landscape. Let’s dive in.
How the economy keeps renters renting
In the last year, the average age of first-time homebuyers rose from 35 to 38. Several factors are motivating many Americans to delay homeownership.
- High interest rates
- Home prices outpacing median income
- Limited supply of new homes
- Rising property insurance (especially in Florida following the hurricanes)
Despite these challenges, renter renewal rates are back to pre-pandemic norms. More people are staying in the rental market, and their demographics are changing. Today’s tenants are older, wealthier, and focused more on space and value than proximity to urban centers.
For investors, the time could be right to improve or expand SFR portfolios.
Real estate strategies in the SFR space
Tracking market trends and geographic hotspots
Some Western markets, including Las Vegas and Phoenix, struggle with an oversupply of rentals. Meanwhile, Midwest markets feel the pressure of new-home shortages. Build-to-rent activity will likely be concentrated in the Southeast and Mountain West. In addition to these regions, the Sunbelt also shows a strong demand and rental performance. Atlanta, Charlotte, Jacksonville, Nashville, and Orlando all look intriguing for 2025.
Being present when housing opportunities appear
Approximately 40% of existing homeowners could sell and secure a comparable rate by 2025, resulting in significant inventory for investors. Growth in the SFR sector hinges on overcoming high interest rates, which have slowed acquisitions.
Optimizing existing properties versus building new
Existing homes will remain a critical driver of growth compared to build-to-rent properties. Investors are showing interest in this segment. Many operators are focusing on holding assets to generate cash.
Disposing of real estate assets
Last year, operators largely refrained from acquisitions, instead focusing on optimizing and unloading properties. When disposition becomes your core strategy, the question is whether to sell properties as-is or after improvements. Disposition at scale is expected to continue into 2025 as they zero in on underperforming markets.
Looking beyond the listings
The backbone of the SFR market is composed of smaller operators managing 10–500 properties. These operators rely on off-market leads and local relationships to build high-quality portfolios.
Keeping tabs on the politics
Regulatory barriers have hindered construction in the past, but a policy shift under the current administration may spur development and create new prospects.
We offer the deepest data on SFR markets
Opportunities are waiting for investors who know where to look, and we offer the best tool for discovery. The CENSAI platform contains the industry’s latest migration trends and core renter demographics, including median income. Users also benefit from precise market predictions up to four quarters into the future. Explore this website to discover how CENSAI’s powerful insights lead to more confident investment strategies.
Want to hear more?
At this year’s SFR West conference, CENSAI took part in a discussion about the single-family rental market and future opportunities. Listen to Devin Boesen, our director of population and migration products, join the conversation.
