The single-family rental (SFR) sector’s performance surged again last quarter, demonstrating its ability to thrive in all economic cycles. SFR construction continued its record-breaking ascent as CMBS activity blossomed. Arbor’s Single-Family Rental Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, examines the sector’s fundamentals as would-be homeowners weigh the rent-vs-buy calculation.
Did you know that at the same time many renters navigate a housing market with limited affordable options, new apartment development continues to be held back by World War II-era zoning restrictions? In many localities, regulations introduced in the mid-1940s have choked the multifamily pipeline for decades, creating a “missing middle” that leaves low-income renters in a lurch.
Increasingly, single-family rental (SFR) operators have been relying on build-to-rent (BTR) development to bridge the housing gap, accelerating the momentum of SFR construction through 2024’s halfway point. Both total SFR/BTR housing starts and BTR’s share of all single-family housing starts reached new record highs in the second quarter, setting the stage for another banner year.
The small multifamily outlook continues to brighten as more signs indicate a normalization has already begun. In the second quarter, originations activity and borrowing conditions improved as completions sat at a five-decade high, Arbor’s Small Multifamily Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, shows. While the subsector’s fundamentals are trending up, it still has room for growth when interest rate relief arrives.
While the overall pace of new multifamily permitting per capita in the U.S. slowed recently, it has picked up momentum in pockets of the country, especially the Midwest. In the first two quarters of 2024, Madison, WI, Columbus, OH, and Omaha, NE, were among the major metropolitan markets posting solid permitting gains, another sign of multifamily’s strength in all cycles.
The U.S. multifamily market followed the quick pandemic contraction with a strong recovery, and has now normalized into a more stable cycle. Demand remained strong across the country, with a wide variety of markets among the leaders for rent growth.
Did you know that more U.S. renters now spend over 30% of their income on housing and utilities than at any other time on record? Limited affordable housing options not only increase the rent burdens of low-income tenants but disrupt physical and mental health, underscoring the need for the creation and preservation of more affordable housing units nationwide. Quality affordable housing adds stability to communities and supports healthier environments that can significantly improve well-being.
Even as rents retreated elsewhere, single-family rentals (SFR) have continued to outperform all other housing sub-types, exceeding the all-property type national average in 17 consecutive months through February 2024, according to Zillow’s Observed Rent Index (ZORI). Annual SFR rent growth has seen substantial gains in many metropolitan areas since national rent growth peaked in March 2022. In this deep dive, the Chandan Economics and Arbor Realty Trust research teams pinpoint the metropolitan areas where SFR rents are rising the fastest.
Building on a commitment to developing young talent, Arbor has added another meaningful milestone to its tradition of excellence, launching the Arbor Scholarship Award Powered by Project Destined. It awards two students who embody high integrity, persistence, and a passion for a commercial real estate career with $1,000 and provides mentorship from Arbor executives.
For more than 30 years, Arbor has been committed to growing financial partnerships that meaningfully impact communities nationwide. From planting trees to celebrate closed loans to supporting environmental organizations, our work has always been a win-win for our financial partners and the planet. But just as leaves change with each passing season, Arbor’s branding is evolving to seize the moment by embracing our roots with True Colors.
Since the Fannie Mae Green Rewards program launched in 2015, green financing has become a mainstay of commercial real estate. In addition to reducing the environmental impact of multifamily housing, the Green Rewards program creates a triple bottom line with increased cash flows, higher quality housing, and lower energy and water usage. With a high upside and little downside, the program is well worth multifamily borrowers’ consideration.
From California wildfires to rising sea levels to Florida hurricanes, the direct and indirect risks of climate change have grown in recent years, making a more substantial impact on the multifamily sector. As the need for sustainability becomes increasingly apparent, lawmakers and lenders have advanced programs and policies that show “going green” is a win-win.
As housing costs spiral, rental affordability has become a more urgent issue, burdening a greater number of Americans. Arbor’s Affordable Housing Trends Report Spring 2024, developed in partnership with Chandan Economics, examines the major policies and programs shaping the marketplace at a time when overdue federal funding expansions have increased agency budgets.
In front of professionals and executives from more than 120 companies at the Real Estate Pride Roundtable in New York City in April, dozens of speakers shared honest perspectives on how far the commercial real estate industry has come on LGBTQ+ inclusion and how much more it has to go.
Lifestyle renters — those who have the means to own but prefer to rent or are willing to pay more for apartments with amenities — have become a key driver of rental demand in single-family rental homes, build-to-rent communities, and other types of high-quality multifamily housing. With this small yet influential demographic growing, our research teams examine and explain the factors driving lifestyle renter demand.
With nearly one-fifth of multifamily properties now over 65 years old, it’s time to consider solutions for rejuvenating the rental housing stock in the U.S. While building rehabs are a tried-and-true solution, build-to-rent (BTR) is an alternative that is well-positioned to expand as Americans increasingly favor renting over homeownership.
In a year when inflation and elevated interest rates weakened affordability, the rental housing sector strengthened and expanded. An analysis of newly released U.S. Census Bureau Housing Vacancies and Homeownership data shows the number of rental households climbed in 2023.