The U.S. housing market has gone through nothing short of a transformation in the last decade. The number of people renting their abode has increased significantly, in some cities surpassing the number of homeowners. The housing market quickly responded to this shift by adding millions of rental units in just a few years, with many U.S. cities witnessing a frenzy of apartment construction.
The most interesting part of this transformation, however, was the fact that the rental market expanded even faster horizontally than it did vertically. For the better part of the decade ending in 2016, single-family homes for rent were the fastest growing type of rental in the U.S., outpacing the formidable apartment boom seen throughout the country.
According to U.S. Census estimates, the number of single-family rentals (SFR) in the U.S. grew by 31% in the ten year period immediately following the housing crisis (2007 to 2016), while multifamily rentals (MFR) grew by 14%. In net numbers, single-family rentals in the U.S. increased by 3.6 million units in ten years, more than rental apartments, which increased by 3.2 million units. As of 2016, the U.S. Census counted a total of over 15 million single-family homes for rent in the United States and a total of over 26 million apartments for rent.
The main trigger for this wave of single-family homes turning into rental homes was the housing crash of the late 2000’s. Many single-family homes with “underwater” mortgages were swept up by a few institutional investors during the crisis and turned into rentals. However, a much larger number of small investors became landlords during that period of time. According to a recent Urban Institute study, most single-family rentals in the U.S. are owned by individual investors. Of the 15+ million single-family rentals currently on the market, only 2% are owned by large investment firms, and about 45% belong to landlords who own just one unit.
Phoenix leads with the fastest growth and the largest gain in single-family rentals
Although they’re more common in suburban settings, single-family rentals have been incredibly prolific in most of the nation’s biggest urban centers. When we looked at increases in the number of renter-occupied households by type, we found that in 22 of the 30 largest U.S. cities single-family rentals expanded faster than apartments between 2007 and 2016.
With some of the largest numbers of foreclosures and sharpest drops in home values during the housing bust, the city of Phoenix tops the list of cities with the biggest percentage increase in single-family rentals. According to U.S. Census estimates, the number of houses for rent in Phoenix increased by a whopping 77% (from 56,900 in 2007 to 100,800 in 2016). Phoenix saw about 44,000 single-family homes turn into rentals during this 10-year period, the largest gain among the 30 cities analyzed.
Boston had the second-fastest increase in single-family homes for rent, 63%, versus a 20% increase in apartments. However, the number of single-family rentals in Boston is much smaller than in Phoenix, going from about 8,200 SFR in 2007 to 13,400 in 2016, as Boston was less impacted by foreclosures and price depreciation.
Fort Worth saw an increase of 60% in single-family rentals, the third fastest among the 30 largest cities, compared to a 17% increase in apartments. Prompted by the housing downturn, the number of SFR in Fort Worth rose from 33,400 in 2007 to 53,400 in 2016. Although it isn’t one of the largest markets for single-family rentals, Ft. Worth witnessed a significant increase during that time period. Rounding up the top 5 are Austin and Charlotte, each with a 55% increase in SFR. In Austin, there were 50,500 single-family dwellings for rent in 2016, 17,900 more than in 2007. In Charlotte, there were 51,400 SFR in 2016, 18,200 more than 10 years prior.
Also on the list of 22 cities where single-family rentals increased at a faster rate than apartments are El Paso, Indianapolis, Nashville, Las Vegas, Chicago, Memphis, Houston, Denver, Louisville, Columbus, Jacksonville, San Jose, Oklahoma, New York City, Detroit, San Diego, and Baltimore. Look up more cities in the table below.
In absolute numbers, the cities of Phoenix, Ft. Worth, Indianapolis, Memphis, Detroit, Las Vegas, El Paso, Oklahoma, and Baltimore gained more rentals in the form of single-family homes than apartments during the 10-year period.
Per U.S. Census 2016 estimates, the five largest stocks of single-family rentals in a city are in:
- Los Angeles 184,000
- Philadelphia 111,600
- Houston 102,100
- Phoenix 100,800
- New York 94,000
Smaller metros have the largest shares of single-family rentals
Zooming out to the metro level, suburban areas are where we typically see the most single-family rental homes. On average, about 70% of SFR are located outside the boundaries of the largest principal city of a metropolitan area.
When we analyzed the metro areas surrounding the nation’s 30 largest U.S. cities, we noticed that the less populated metros favor single-family rental homes, while the larger and denser metros favor apartments.
The metro area of Oklahoma City has the largest share of single-family rentals. Almost half (48%) of its rental stock is made up of single-family homes. The second largest share of SFR is in metro Memphis, 45% of its total rentals. The metro area of Detroit holds the third largest share of single-family rentals, 44%, based on U.S. Census estimates. On the other hand, New York City-Newark-Jersey City metro has the smallest share of SFR, as apartments make up 89% of the total rental units. Boston metropolitan area rentals are predominantly apartments as well, 86%. Also, 76% of the rental market in the Greater Chicago Area is represented by apartments. Look up more metros in the table below.
Why are single-family homes for rent so popular now?
While everyone’s been waiting for homeownership to fully regain its pre-crisis strength, single-family rental homes have become “Plan B” for those anxious to break out of their apartments, and can’t buy a house yet, or have lost their homes to foreclosure, short sale, or financial setbacks. A little over half of the total number of single-family home rentals on the U.S. market are occupied by families: married couples and parents with minor children. Although they can cost on average about $1,000 more in monthly rent than an apartment, single-family rentals offer the extra space families need, the privacy of their own home, and the kind of neighborhood they want.
Houses are also the rental of choice for many single people who want to share the cost of rent with other single roommates. This demographic represents almost half of the renters living in single-family houses today. Census data also shows that people from all generations are renting single-family homes: we see a large number of downsizing baby-boomers, older millennials who are starting to form households, as well as Generation X-ers, who already have families with children.
Changes in SFR vs MFR in the top 100 largest U.S. cities (2007-2016):
|City||Population 2016||Single-Family % change||Single Family # change||Multi-Family % change||Multi-Family # change|
|Fort Worth, TX||855,900||60%||20,000||17%||9,700|
|Los Angeles, CA||3,976,300||12%||19,200||14%||88,100|
|New York, NY||8,537,700||24%||18,400||4%||86,400|
|San Antonio, TX||1,492,500||26%||16,100||27%||32,300|
|San Diego, CA||1,406,600||23%||15,600||13%||20,400|
|New Orleans, LA||391,500||152%||15,500||119%||30,900|
|Las Vegas, NV||632,900||42%||13,000||6%||3,700|
|El Paso, TX||683,100||51%||12,100||14%||6,700|
|Colorado Springs, CO||465,100||59%||11,000||33%||11,700|
|San Jose, CA||1,025,400||32%||10,700||22%||16,900|
|Virginia Beach, VA||452,600||33%||7,600||21%||5,700|
|St. Petersburg, FL||261,000||80%||7,100||11%||2,800|
|St. Louis, MO||311,400||49%||5,900||4%||2,100|
|North Las Vegas, NV||238,700||44%||5,700||25%||2,600|
|St. Paul, MN||302,400||77%||5,200||10%||3,900|
|Corpus Christi, TX||325,700||28%||4,200||17%||4,500|
|San Bernardino, CA||216,200||37%||4,000||-3%||-600|
|Santa Ana, CA||334,200||36%||3,500||-1%||-200|
|Fort Wayne, IN||261,300||26%||3,100||14%||3,200|
|Chula Vista, CA||267,200||31%||3,000||7%||1,400|
|Jersey City, NJ||264,200||44%||1,500||28%||15,000|
|Baton Rouge, LA||227,700||9%||1,200||-8%||-2,700|
|Long Beach, CA||470,100||-2%||-400||14%||9,900|
|San Francisco, CA||870,900||-9%||-2,600||14%||24,600|
Total stock of SFR vs MFR in the metro areas of the 30 largest U.S. cities (2016):
|Metropolitan Area||No. of single-family units||No. of multi-family units||Principal City||No. of single-family units||No. of multi-family units|
|Dallas-Fort Worth-Arlington||310,300||699,400||Fort Worth, TX||53,400||67,700|
|Austin-Round Rock||95,400||207,500||Austin, TX||50,500||152,100|
|El Paso||42,300||59,300||El Paso, TX||35,900||56,200|
|Las Vegas-Henderson-Paradise||144,500||208,900||Las Vegas, NV||43,700||60,900|
|Houston-The Woodlands-Sugar Land||283,400||627,300||Houston, TX||102,100||387,500|
|Louisville/Jefferson County||65,700||102,300||Louisville, KY||37,600||68,200|
|San Jose-Sunnyvale-Santa Clara||86,500||194,000||San Jose, CA||44,000||93,000|
|Oklahoma City||90,800||89,300||Oklahoma, OK||42,600||53,700|
|Dallas-Fort Worth-Arlington||310,300||699,400||Dallas, TX||53,100||248,200|
|San Antonio-New Braunfels||114,700||177,000||San Antonio, TX||77,200||150,800|
|New York-Newark-Jersey City||388,800||3,086,100||New York, NY||94,000||2,019,700|
|San Diego-Carlsbad||182,900||339,600||San Diego, CA||84,600||183,100|
|Los Angeles-Long Beach-Anaheim||654,400||1,600,000||Los Angeles, CA||184,000||696,300|
|San Francisco-Oakland-Hayward||219,200||560,400||San Francisco, CA||26,400||195,700|
Data and terminology source: U.S. Census Bureau, American Community Survey – 2007 to 2016 1-year estimates. A single-family unit is defined as per U.S. Census Bureau as 1 unit attached or 1 unit detached. A multi-family unit is defined as 1 unit in a building of 2 or more units, also referred to as an apartment. A rental or rental unit is defined a renter-occupied housing unit. Where the share of single-family units and the share multi-family units do not add up to 100%, the remaining % share is represented by other types of rentals (mobile, RV and van). City and metropolitan area (MSA – metropolitan statistical area) are defined as per Census Bureau’s MAF/TIGER database. Amounts may be rounded to the nearest hundred or the nearest thousand.
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