Diana Olick | CNBC Real Estate Correspondent As the demand for detached houses for rent increases, big landlords jump into the housing business to boost reduced supplies. The impetus comes as more Americans have the flexibility to work from anywhere and look for larger outdoor spaces. “This market is very inadequate. There are not enough quality homes for the number of American families,” said David Singelyn, CEO of American Homes 4 Rent, which has created more than 100 rental communities in the past five years. According to the National Association of Housing Builders, there were 13,000 new homes that started renting in the first quarter of this year, up 63% from a year earlier. Homes built for rent still account for only 5% of the housing market, but this is higher than the historical average of 2.7%, according to the union. In Mooresville, North Carolina – about 30 miles north of Charlotte – the latest development of American Homes 4 Rent includes more than 220 rental homes with access to amenities such as swimming pools and gyms. The rent includes landscaping and maintenance. Jake and Stephanie Murphy, who were able to work remotely after the pandemic, are among those who relocated to the community after selling their home in California. They could afford it, but chose to rent a four-bedroom family home for $ 2,400 a month. “We’re just not sure if house prices will really stay where they are right now. So we did not want to buy at the peak and then drop in a few years,” said Stephanie Murphy, 29. . The Murphys also said they liked the flexibility of renting as they learned about a new area. The number of rentals is now declining slightly as some smaller landlords sell their homes at the top of this expensive market. But Singelyn expects to continue building homes for rent in the coming years based on the growing demand he says he sees. “How much research do we get? How many appearances? How many applications do we have in each available home? They are two to three times larger today than they were two years before the pandemic,” Singelyn said. Other companies investing in the construction market for rent include Lennar, DR Horton, Taylor Morrison and Toll Brothers. Invitation Homes, the largest listed company, last year launched a joint venture with housing company Pulte Homes to build more rental housing. Investments in rental housing for a family – both for the purchase of older homes and for the construction of new ones – have increased dramatically. The industry had investments of about $ 3 billion in 2020, according to John Burns Real Estate Consulting. By 2021, that number had risen to $ 30 billion. It is expected to reach $ 50 billion this year as larger institutional investors, home builders and homeowners rush into the market. Like most homeowners, American Homes 4 Rent went into business during the Great Depression, when millions of homes were foreclosed on. The company snatched cheap, distressed real estate, often at the auction block, and turned it into lucrative rents. There were 11.6 million households renting a family in 2006, at the peak of housing. That number rose to 15.5 million in 2014 after the housing market collapsed, according to John Burns Real Estate Consulting. But growing demand and tightening supply also means that homes for rent are becoming less affordable. Nationwide, rents for a family are up more than 13% from a year ago, according to CoreLogic. “The lack of real estate for a rental family is plaguing the market, pushing rents to record levels,” said Molly Boesel, chief economist at CoreLogic. He noted that the number of rental properties for a family recorded earlier this year was much lower than pre-pandemic levels. Back in Mooresville, North Carolina, Murphy watches the market unfold. But Jake Murphy said he does not believe home ownership is part of the American dream and that he is currently enjoying renting. “I’m excited because you look in the neighborhood, there are Texas and New York license plates, and then we have California,” he said.
