Even as the single-family rental (SFR) sector has attracted increased investor activity, the total number of SFR households has moderated due to the influence of overarching housing trends.

Miami — a market with an attractive climate, urban amenities, and quality transportation options — has seen intense post-pandemic population growth. While its resurgence has been celebrated by many, Miami’s success has come at the cost of weakening rental affordability in the city.

For low-income renters, affordability is a deeply rooted issue. Since 2010, rental affordability has consistently and severely eroded in the U.S., with average rents growing faster annually than average incomes more than 72% of the time. As renters face increased inflationary pressures, state and local governments are exploring a mix of creative and tried-and-true solutions to expand the affordable housing supply.

Although they remain near historical lows, apartment vacancy rates in the U.S. have begun to climb. However, this recent reversal may be a temporary trend, driven by renter satisfaction and a slowdown in the pace of new construction.

Over the past year and a half, the Federal Reserve has embarked on one of its most aggressive monetary tightening cycles in history. With the federal funds rate sitting above 5.25% and two more Federal Open Market Committee (FOMC) policy meetings scheduled through the end of 2023, questions remain about how short- and medium-term monetary policy adjustments could influence multifamily investing. While a rapid reversal is unlikely, the next phase could ease some interest rate pressure.

From California to Maui, the frequency and scope of wildfire events are rising, causing insurance markets and public agencies to reevaluate property in areas at risk for catastrophic damage. As a result, rental housing providers are seeing greater limitations to coverage, higher premium prices, and, in some cases, a total absence of viable private insurance — a trend detailed in the NMHC 2023 State of Multifamily Risk Survey and Report. This troubling new trend has placed many rental housing operators in a bind where they must simultaneously contend with the declining availability and affordability of insurance options.

While the single-family rental (SFR) sector’s rent growth averages have retreated from record highs, structural tailwinds are keeping price growth positive — both nationally and in major SFR markets. In this research brief, Chandan Economics and Arbor Realty Trust analyze DBRS Morningstar data, which covers the top 20 MSAs by SFR activity, to discover the metropolitan areas where SFR rent growth is the hottest right now.

As Baby Boomers reach retirement age, their evolving geographic preferences are strengthening housing markets and local economies in new locations, which feature attractive climates, relative affordability, and ample outdoor activities. With swelling populations of senior citizens, our top five emerging metropolitan areas for retiree relocation are fertile ground for multifamily real estate investment.

Through the first half of 2023, market disruptions have had limited impact on the overall performance of the small multifamily subsector even as prices fell and cap rates climbed. Arbor’s Small Multifamily Investment Trends Report Q3 2023, developed in partnership with Chandan Economics, delivers data-driven analysis on the subsector’s structural health, shaping its positive outlook.

After the historic rental housing bull run of the 2010s and the early 2020s, the open question is: can it maintain this momentum over the next cycle? While the answer is highly debatable, trends in demographics, preferences, and market conditions show the presence of significant tailwinds that will continue to propel investment prospects forward. Chandan Economics, Arbor’s research partner, analyzed historical data from the U.S. Census Bureau to project how Generation Z could impact the future of the rental housing market.