in Daily Dose, Headlines, News The market share for single-family homes built for the purpose of renting them out (rather than selling to an owner-occupant) is down from its peak reached in 2013, but in the last few quarters it has been trending upward.The April 2016 New Residential Construction report from HUD and the U.S. Census Bureau released this week, which measures quarterly housing starts and completions by purpose and design, found that single-family built-for-rent homes comprised 4.3 percent of all housing starts during the first quarter. That share is higher than the historical average of 2.8 percent but down from its peak of 5.8 percent which occurred in early 2013.For the last four quarters, single-family homes built-for-rent have totaled about 32,000, according to the National Association of Home Builders (NAHB). That number has been on the rise—research from John Burns Real Estate Consulting indicated that approximately 25,000 single-family detached homes were built for renting in all of 2014.Tim Herriage, CEO of Dallas-based 2020 REI Companies, said the build-to-rent strategy is gaining popularity because it is more of a sure thing for investors.“The base of it is truly to have a predictable asset that comes with embedded equity,” said. “Investors are also able to choose components of the home based on its desired use.”Herriage added that because the homes are new, operational expenses, turn times, the cost of repairs and maintenance, and capital expenditures are all lowered through the lifestyle of the investment. In addition, builders select durable materials that can withstand tenant behavior.“With the onset of the Great Recession, the share of built-for-rent homes rose,” said Robert Dietz, Chief Economist and SVP for Economics and Housing Policy for NAHB. “Despite the current elevated market concentration, the total number of single-family starts built-for-rent remains fairly low in terms of the total building market. However, after falling during 2013, the market share has shown signs of gains over the past year.”The 2013 American Community Survey reported that the single-family portion of all rental housing stock in the country was 35 percent, with the built-for-rent share of single-family homes comprising a much smaller percentage. This, according to Dietz, is because single-family homes often transition to rental housing stock as they age. John Burns estimated that approximately 10 percent of single-family detached households (12.7 million out of 120 million) in the country are renting.Click here to view the HUD/Census Bureau complete report.The Five Star Institute President and CEO Ed Delgado recently announced the formation of the Single-Family Rental Association (SFRA), a member-led conduit for connection and training in the growing single-family rental market. The SFRA will lead the single-family rental sector in identifying emerging trends, discussing solutions, and formulating best practices. The Association will offer ongoing training and education, networking, and business opportunities, in conjunction with the Five Star Institute’s Second Annual Single-Family Rental Summit on November 1-3, 2016 at the Frisco Conference Center at the Embassy Suites Hotel, Frisco, Texas. Click here to register for this event.Editor’s note: The Five Star Institute is the parent company of MReport and theMReport.com.
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