Single-family rentals’ role in the U.S. housing ecosystem is malleable. In different markets, this product type serves different purposes — acting as a magnet for transient lifestyle households in some metros, while providing families with affordable access to quality public school districts in others. As a result, SFR retention rates vary dramatically across the country, depending not only on the cost of homeownership but on the purpose that single-family rentals serve in that market, creating a unique group of top markets.

Over the last few years, the list of top rent growth markets was dominated by the more affordable Sun Belt markets. However, over the last several months, a more diverse selection of markets has comprised the list.

Even with concerted public and private initiatives, the affordable housing shortage has persisted in cities and communities across the U.S. Arbor’s Affordable Housing Trends Report Spring 2023, developed in partnership with Chandan Economics, analyzes the challenges and assesses the outlook of a sector that has gained more investor attention amid growing economic headwinds.

While the 2008 financial crisis prompted a cyclical shift in U.S. housing — impacting everything from home prices to who can qualify for a mortgage — an equally impactful demographic change was just taking shape. The unprecedented wave of Baby Boomers that began retiring would disrupt the balance of the housing market.

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.