Renter demand for single-family housing has soared during the pandemic, but the profile of a renter in this segment looks a lot different than renters in the apartment market, according to Dori Nolan, SVP of national client services at Berkadia.
To start, single-family renters have a high education than renters in the apartment space. “I think that we have been able to prove that out. They are usually carrying a Bachelor’s Degree or higher of education,” Nolan tells GlobeSt.com.
Many single-family renters have moved from more expensive markets into affordable markets in the Sunbelt region, like Phoenix, Atlanta and cities throughout Texas and Florida. “These renters could have been a renter-by-necessity in a primary market, but is now a lifestyle renter in Atlanta or Texas or Arizona,” says Nolan. “It can change, but the occupancy proves that the housing market in general is pretty resilient.”
Above all, single-family renters are looking for a different experience than apartment renters. They want a garage, more bathrooms and more bedrooms. “These renters are looking for a home-feel,” says Nolan. “They want flexibility, and they don’t want the burden of owning a home. The turnover of these homes is less prominent as well. I think what we have found it is less than 50%. They are living in these build-for-rent homes longer. Apartment renters tend to jump around more than single-family renters.”
Single-family renters are an increasingly large segment of the renter population. Nolan estimates that one-third of all renters live in single-family homes. “This is a big covert, and I think it is only going to become more popular post-COVID,” she says.
While demand is significant and growing, the market is severely undersupplied. “We are still extremely undersupplied. The build-to-rent product as a sector is averaging 95% occupancy, and that has been pretty stable for a long time,” says Nolan. “Even with the addition of new units, the occupancy hasn’t suffered.”
While some of the renters in this segment could be on the path to homeownership, especially those that moved to a new, more affordable market, Nolan suggests that many will stay in the rental market. “Renting still has benefits. You don’t have to come up with a down payment or go through the mortgage application process where there is a lot of scrutiny,” she explains. “Maybe they are paying a little bit more, but they are getting a better quality place to live.”