SFR Construction Captures Record Market Share as Cap Rates Rise The outlook for the single-family rental (SFR) sector continues to be upbeat even as rent growth cools nationally. Build-to-rent (BTR) communities have been expanding their footholds in neighborhoods across the U.S. These starts hit a new record high as rental demand has risen from would-be home buyers priced out of ownership by high interest rates. Key Findings: BTR accounts for 6.3% of new single-family construction starts in the past year, a new record high. SFR rent growth on new leases slows sharply as renewal rent pressures maintain their strength. Cap rates have started to rise, jumping to 5.6%. Complete the form to instantly access the full report!
Analysis
The surging U.S. multifamily market showed signs of slowing during Q4 2022. Rent growth remained high, although lower than the record-breaking increases last year.
Articles
Because single-family rental (SFR) properties tend to be located in the suburbs and away from public transportation hubs, the typical tenant drives to work. As a result, an area’s typical commuting time is a factor that is often weighed heavily by residents — impacting rental demand and pricing.
Current Reports
The small multifamily sub-sector ended 2022 on a high note with originations falling just behind 2021’s peak. As economic storm clouds continue circling, small multifamily appears fortified from any reverberations that may result.
Articles
Positive rent reporting, a new piece of Fannie Mae’s mission-driven lending agenda, is a leap forward for the U.S. rental housing market amid an ongoing affordability crisis. This initiative, recently launched in a pilot program in Chicago, has significant upside potential for not only tenants but landlords, owners, and multifamily borrowers as well.
Valuations Flatten as Cap Rate Start to Rise from Record Lows The small multifamily sub-sector ended 2022 on a high note with originations falling just behind 2021’s peak. As economic storm clouds continue circling, small multifamily appears fortified from any reverberations that may result. Key Findings: Small multifamily originations reached $80.7 billion in 2022, the highest annual total after 2021’s record high. Cap rates inch higher from record lows, ticking up to 5.1%. Debt yields rise and LTVs hold near post-pandemic lows as lending standards remain tight. Complete the form to instantly access the full report!
Articles
Passed in the 11th hour of the 117th Congress, the $1.7 trillion federal spending package prioritizes the expansion of affordable housing in 2023 through increased funding for targeted programs.
Special Reports
Special Report: Spring 2023 The rental housing sector is well-insulated but not immune to market forces even as the economy edges into correction territory, Arbor Chairman and CEO Ivan Kaufman and Chandan Economics Founder Sam Chandan demonstrate in the findings of Arbor’s Special Report Spring 2023. Key Findings: The sustainability of consumer financing and geopolitical tensions are risk factors capable of triggering an economic contraction more severe than baseline forecasts. Unlike other commercial property types, the market standard of amortizing mortgages will insulate the rental housing sector from expiring debt distress. The single-family rental and build-to-rent sectors should see structural gains despite cyclical headwinds as awareness for the product type grows and hybrid work supports a broader geography of housing choices for urban-working Americans.