Research

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.

SFR will maintain exposure to the cyclical disruption brought on by the housing market’s softness and rising interest rates, even though its structural growth outlook remains positive and unchanged.

Even as some developers have pumped the brakes on single-family construction, construction starts of single-family rental (SFR) units soared to a new record high in 2022 — a signal that demographic and structural tailwinds continue to outweigh cyclic recessionary headwinds.

While housing migration and rental demand over the last few years have been dominated by more affordable Sun Belt markets, a more diverse selection of markets comprised the top rent growth list for 2022.

Even as the economy’s momentum slowed in 2022, multifamily construction continued to ramp up, reaching highs not seen since the 1980s. As the number of new units increased rapidly last year, the multifamily sector’s share of all new residential construction also expanded to make up more than one-third of all starts.

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.

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.

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.

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.

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.