Yardi Matrix Reports Institutional Investment in Single-Family Rentals Is Rising

According to Yardi Matrix’s new bulletin, institutional investment in single-family rental (SFR) homes is on the rise and is expected to grow drastically over the next eight years. For 2021, Yardi Matrix shares that institutional acquisitions of SFRs in communities of 50 or more units skyrocketed to $2.5 billion. Yet, investors are now having to look at the most effective strategies for growing portfolios as interest rates increase.

“Rising home and mortgage costs in the second quarter of 2022 increased the cost of capital for institutional buyers, so the segment’s growth is likely to slow and returns will moderate. Even so, the industry benefits from strong long-term demand drivers and the explosive growth in institutional capital,” says Matrix analysts.

It is estimated that institutions own 700,000 SFRs in 2022, or about 5% of the 14 million SFRs nationally, according to recent research by MetLife Investment Management. It is forecasted that by 2030, institutions will own more than 40% of all SFRs, increasing to 7.6 million homes.

Currently, the portfolio growth is largely focused on build-to-rent (BTR) or acquiring portfolios from small owners. On track to deliver more units than any year prior, there are more than 25,000 units under construction and 4,300 have already been completed in the first half of 2022. Last year’s record high was 7,705.

The new bulletin also shares units under construction as well as builders and owners. In Phoenix, there are currently 5,254 single-family units under construction, followed by Dallas with 2,234 and Charlotte with 1,426. American Homes 4 Rent has 2,757 under construction while NexMetro Communities has 1,702, closely followed by Redwood Living with 1,659.