Even as single-family home prices stay high and continue to rise, single-family rental investment rates are showing signs of new growth in 2016, following their decline during the post-recession recovery, according to National Real Estate Investor’s Bendix Anderson.
Institutional investors have bought 2.9% of all single family homes sold in the first half of 2016, up from 2.6% in 2015, and increasingly companies who specialize in managing single-family rentals are buying properties from other investors. This is all despite home prices which are rising more quickly than rents, resulting in cap rates below 6.0% in 45 markets, according to RealtyTrac.
“Investors are willing to accept much smaller returns,” says Steve Hovland, director of research for HomeUnion, a real estate investment management firm. “A volatile stock market has made investor[s] wary. Single-family rental housing is much more attractive than other options.”