Single-Family Home Rentals Are Excelling in the Pandemic

Stay-at-home orders tied to the COVI/D-19 pandemic have not tamped down the demand for single-family house rentals, executives from two REITs said in recent first-quarter earnings calls.

Dallas Turner, president and CEO of Invitation Homes, said occupancy climbed to a record-high 97.2% in April as the company increased its access to working capital and paused sourcing new acquisitions to be ready for the pandemic’s many uncertainties.

“Shelter-in-place has not impacted our ability to lease homes,” Turner said. In fact, he said, residents have been moving into the company’s properties at the same rate as last year and at a faster clip than they have been moving out.

David Singelyn, CEO of American Homes 4 Rent, said that while first-quarter home occupancy slightly lagged last year’s numbers, demand for homes increased significantly in April and generated record levels of showings. Singelyn said he anticipates good leasing and occupancy numbers in May.

Demand for single-family rental homes is increasing as would-be buyers are postponing or canceling purchases during the economic downturn, Singelyn said. Single-family homes are also a draw to residents living in multi-family housing who are now looking for lower-density options in light of the pandemic and recommendations to maintain physical distancing, he said.

“Today’s story is the COVID-19 crisis,” said Singelyn.

Rent collections have not dropped precipitously, according to the executives, despite a national unemployment rate that has jumped to 14.7%, the highest since the Depression era. Charles Young, chief executive officer of Invitation Homes, said rent collection in April topped 95% of the company’s historical average. Half of those missed rents have been paid since the April books were closed, Young said.

Rent payment numbers improved in May with collection rates through the fifth day of the month topping 100 percent of the pre-COVID-19 average, according to the company.

“We like our high-quality, sticky resident base, and we believe that the ripple effects of this pandemic could make the option to lease a single-family home even more attractive,” Young said.

At American Homes 4 Rent properties, 82% of rent payments had been made through May 5, which tracks with April figures and falls within six percent of the company’s historical rate, said chief operating officer Bryan Smith.

American Homes is not forgiving rent but it has suspended late fees and has stopped evictions. About four percent of residents in company properties have requested hardship assistance, Smith said.

“The longer this crisis continues, the more difficult it may be for some of our residents to maintain regular rent payments,” Smith added.