The recent IMN Single-Family Rental (SFR) West Forum in Scottsdale, Arizona provided valuable perspectives on the current and future state of the SFR market. Industry leaders shared compelling insights that demonstrate the resilience and evolving nature of this space.

The State of the SFR Industry

Looking at the current state of the SFR industry, Jeff Klein, Executive Director & Principal of SVN | SFRhub Advisors, presented market data and trend analysis that all SFR industry participants should know including:

• Nationally the monthly mortgage payment for a typical single-family starter home exceeds rent. It’s $1,091 more expensive to purchase.
• Single-family new lease asking rent increased 3.4% YOY on average nationwide. And rent growth has historically stayed positive.
• SFR occupancy rate maintained at 94.4% in September.
• Many Americans prefer to have housing options and many who rent say that it fits their lifestyle and appreciate the freedom and flexibility.

Market Resilience and Flexibility

Rental Demand Continues to Grow

The panel highlighted several factors driving an increase in rental demand including:

• Millennials represent the largest cohort of potential homebuyers.
• The rise of the gig economy creates a need for housing flexibility.
• As people continue to work from home, there’s a strong desire to rent larger single-family homes.
• Many people prefer the flexible option to rent without being tied down by the added responsibilities of owning a home.

In addition, John Hirschfeld, Chairman and Co-Founder of HomeRiver Group, pointed out that 36% of SFR properties are professionally managed^[ii], which points to growth among owner-operator investors. As Beth O'Brien, CEO and Founder of Encore Finance noted, an intriguing statistic reveals that over a third of current sellers plan to live in a rental home after selling, suggesting a shifting perception of homeownership.

AI Adoption and Expansion

The panel also highlighted the growing role of technology, specifically use cases for AI within the SFR space. Gary Beasley, CEO and Co-Founder from Roofstock, emphasized the potential of AI in improving customer satisfaction and response rates. Tim Reilly shared an exciting example of using AI for quality control in Broker Price Opinions (BPOs), provided by homegenius Real Estate, demonstrating how technology may help streamline operations.

Investment Considerations

For investors looking ahead to 2025, several key themes emerged:

• Interest rates may lower.
• Shifts in regulatory focus may result in benefits to many investors and builders.
• Flexibility for investors may be crucial in the current market as changes occur quickly.
• The American dream is evolving beyond traditional homeownership.
• There may no longer be a stigma attached to renting over owning.
• Technological advancements are creating new efficiencies in property and portfolio management.

The SFR industry remains bullish and adaptive. As Tim Reilly put it, “the market continues to create choice for individuals and families who want flexibility in their living arrangements”. The combination of changing lifestyle preferences, technological innovation, and market resilience makes the SFR industry an exciting space for investors.

Investors should remain agile, embrace technological tools, and recognize the changing dynamics of housing preferences as they approach 2025.

[i] Hermann, A. (2023, July 18). 8 facts about investor activity in the single-family rental market. Joint Center for Housing Studies. https://www.jchs.harvard.edu/blog/8-facts-about-investor-activity-single-family-rental-market
[ii] Property management trends report in the residential PM industry in U.S. https://www.leadsimple.com/pm-trends-report

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