Posted by: Josh Lehner | November 5, 2021

Single Family Rentals (Graph of the Week)

Happy Friday everybody! Just a quick note on something that has cropped up more than a few times during the pandemic: single family rentals. Depending upon who you talk to the concerns vary from local regulations pushing landlords to sell, thus reducing the number of rentals, to big institutional investors buying up homes to turn into rentals, or even ibuyers flipping homes quickly and distorting the market further. In a supply constrained market, it can certainly feel like every possible outcome is problematic because we have not built enough houses in recent decades. With that said, let’s turn to the data and the latest Graph of the Week.

Technical note: This data comes for the household survey and has a small sample size. As such we should take the precise year-to-year fluctuations with a grain of salt and focus on the larger trends.

Overall, the patterns seen in single family rentals in recent decades make intuitive sense. During the housing bubble, homeownership rose considerably, meaning there were fewer rentals. Following the foreclosure crisis these patterns reversed and there were record number of rentals as fewer people could afford, or wanted, or even qualified for ownership. In the second half of last decade homeownership rates rose and the rental share began to fall. During the pandemic ownership accelerated further as home sales boomed.

Where does this leave us? Right now it looks like single family rentals in Oregon are in line with historical norms, albeit on the lower end as ownership demand is strong. Specific issues like local regulations or institutional investors can matter, but they are likely more second order impacts rather than the primary drivers of the market, which continue to be demographics, income gains, and constrained supply.


Responses

  1. I can believe that it’s pretty constant. I think most of the big buyers (like Zillow was) and small guys were looking at flips and we’re kinda late in that cycle.

    Am still unsure if the rent growth will be that strong this time next year. It’s already slowing a lot in places like Boise.


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