Single-Family Rental Landlords Will Likely Prosper During and After Pandemic
Despite all the negativity the Coronavirus pandemic has caused, there’s likely a silver lining for single-family rental landlords and property managers, and one many may already be experiencing. These homes are simply in higher demand as a result of the pandemic, and likely will continue to be after it ends — and there are several reasons why.
More people moving to single-family rental homes in suburbs
Living in close quarters with others and sharing common spaces, such as within apartment complexes, have made people worried they’re more likely to contract the virus. And they aren’t wrong. Dr. John Raymond, President and CEO of the Medical College of Wisconsin, says that those in apartments are at a higher risk of contracting COVID-19. As a result, more people are moving to single-family homes in less populated areas to better social distance.
Dallas Turner, president and CEO of Invitation Homes, a property management company with approximately 80,000 homes for lease in 16 U.S. markets, said the company’s occupancy rate skyrocketed to a record-high of 97.2% in April 2020. And David Singelyn, CEO of American Homes 4 Rent, another property management company with more than 52,000 homes in 22 states, has similar remarks. He said despite the company’s 2020 Q1 home occupancy being slightly lower than last year, the demand for homes in April of this year increased significantly, resulting in a record number of showings. He expects strong leasing and occupancy numbers for May 2020.
The economic downturn is forcing people to rent that planned to buy
As we all know, the pandemic has resulted in a high national unemployment rate, jumping to 14.7% — the highest since the Great Depression. Those that were planning on buying single-family homes have likely had to put their plans on hold since less money is coming in each month and credit scores have likely decreased. This means a greater demand for single-family rental homes is in play. Ted Jones, the chief economist at Stewart Title Guaranty Company, agrees. “I think single-family rental markets (are) in the catbird seat as we speak right now.”
It's easier to work remotely
We’ve seen several companies, including Facebook and Google, allow their employees to work from home for the rest of 2020, as well as Twitter recently announcing it will allow its employees to work from home “forever.” It’s likely other businesses will follow suit to avoid transmission of the virus in offices with large numbers of employees.
For those of us that have been working from home in an apartment, we know it can be difficult since space is limited. As a result, those that will be working from home for the foreseeable future could choose to move to a single-family rental home to set-up a larger, more efficient office space. “Space for a dedicated, comfortable, efficient home office may become a more widely-sought-after attribute. This could motivate more renters to look for a space that is large enough to accommodate this dedicated space,” says Brad Hunter, Managing Director of RCLCO, a real estate consulting firm.
More babies will be born
As comical as it may sound, the pandemic will likely result in more couples getting pregnant due to sheltering in place together for such a long period of time. For more space, these couples could look to single-family homes to account for their growing families. And with a trend of single-family rental homes already on the rise before the pandemic even started to avoid homeownership risks and hassles, Hunter says we could see a further surge of single-family rental popularity after the pandemic ends.
It's not all bad news
We’ve seen the pandemic’s negative effects ripple through our economy. However, there’s always a silver lining in a dark cloud, and one of those is the current popularity of single-family rental homes. It’s likely we’ll continue to see this trend rise after the pandemic ends, which is indeed positive news for all single-family home landlords and property managers.