Thursday, January 25, 2024

Guardian Asset Management

Single Family Rental

Newsletter

From Our

SFR Operations Team

Josh Beam

Joshua L. Beam

SFR National Director of Operations 

jbeam@guardianassetmgt.com

314-281-3439

William Lynam

William Lynam

Director of Property Management

wlynam@guardianassetmgt.com

267-201-3616

Renting a Home Still More Affordable Than Owning Across U.S. Even as Both Remain Financial Stretch

ATTOM, a leading curator of land, property and real estate data, today released its 2024 Rental Affordability Report, which shows that median three-bedroom rents in the U.S. are more affordable than owning a similarly-sized home in nearly 90 percent of local markets around the nation.

The report shows that both renting and owning a three-bedroom home continue to pose significant financial burdens for average workers, consuming more than one-third of their wages in the vast majority of county-level housing markets. But median rental rates still require a smaller portion of average wages than major home-ownership expenses on three-bedroom properties in 296, or 88 percent, of the 338 U.S. counties with enough data to analyze.

US Annual Rent Growth Holds at Less than 3% in November

• U.S. single-family rent growth increased by 2.7% year over year in November, in line with numbers recorded since the summer of 2023.
• Attached rents grew by 3.3% and detached single-family rental costs grew by 2.3% on an annual basis.
• Among major U.S. metro areas, San Diego posted the nation’s largest year-over-year rent gain in November, while both Austin, Texas and Miami again saw annual declines.
• Appreciation in the lower-priced rental tiers continued to lead the nation, at 2.9%.

Atlanta’s Squatter Problem Is Vexing Wall Street Landlords

An estimated 1,200 homes are illegally occupied

in the Atlanta metro area, an epicenter for institutional investors.

In the biggest US market for institutional landlords, squatting in vacant rental homes has reached such extremes that owners offer intruders money to leave and many property managers won’t check on suspect houses alone.

A squatter last spring shot one of Matt Urbanski’s employees in the leg during a four-mile car chase through the Atlanta suburb of Lithonia. Urbanski, who runs a home cleaning and construction firm, had been trying to remove the man’s belongings from a house owned by rental industry giant Starwood Capital Group. They got into a scuffle, which escalated into a pursuit and gunfire.

“I’d be terrified in Atlanta to lease out one of my properties,” Urbanski said.

Around 1,200 homes in metro Atlanta recently have had squatters — or people occupying a property illegally without a landlord-tenant relationship — according to an estimate from the National Rental Home Council trade group. That’s far more than in any other US metro area tracked by the council. And it’s hitting big names in America’s single-family-rental business, including Starwood, Cerberus Capital Management’s FirstKey Homes and Amherst Group — all of which have had dozens of properties with squatters. Landlords say evicting intruders can take half a year or more, due to backlogged court systems and overwhelmed sheriff’s offices.

Pittsburgh-area congressman wants change as Wall Street snatches homes away from first-time buyers

For the past few years, Wall Street has been buying up Main Street. Hedge funds and private equity firms are snatching up single-family houses by the thousands and turning them into rental units, driving up home prices and freezing out young, first-time home buyers -- all for the benefit of their investors. 

"This is a whole new model. They own property literally around the country and around the world. You've taken single-family houses, turned it into a rental market, turned it into a way to achieve what in economics is called an economy of scale, pulling money out of each one because of the volume that they own," said Sabina Deitrick of Pitt's Center for Social and Urban Research. 

Built-To-Rent Development Forecast: New Supply To Fall Short Of Demand This Year

The blazing-hot pace of construction in the build-to-rent (”BTR”) segment of housing is slowing down sharply. But it is not for a lack of demand from consumers. Rather, the slowdown is a reflection of a “capital crunch” for new construction.

Shortly after interest rates started rising sharply in 2022, the amount of capital seeking BTR deals was drastically reduced. The debt side worsened before the equity side; the harbinger was the failure of Silicon Valley Bank and Signature Bank. Banks’ earnings experienced sudden increases in funding costs, and profitability pressures mounted amid the Fed’s tightening of monetary policy. Less profit and lower deposits meant less “excess reserves,” which in turn meant less money available to loan. Since then, the equity component has also been more limited, but the most common descriptor of the equity’s stance is “selective.” That is a euphemism for “some deals that worked on paper last year don’t pencil out this year.”

In the vast majority of U.S. real-estate markets, renting is still cheaper than owning, according to a new report from Attom that looked at renting versus owning three-bedroom homes.

The analysis revealed that home buyers can’t seem to catch a break in this market. As mortgage rates fall from two-decade highs, home prices continue to rise, keeping the cost of owning high.

In contrast, renting is a lot more affordable: Median rental rates require a smaller portion of wages than buying a home in 296 out of 338 counties in the U.S., or 88%, Attom said.

The real-estate data analytics company looked at single-family home prices between January and November 2023, as well as rental and wage data, for 338 U.S. counties with enough data to analyze.

“Continuously increasing home prices contribute to the escalation of rental costs, making both buying and renting properties a challenging endeavor across most of the United States,” Rob Barber, the CEO of Attom, said in a statement. “But the latest data shows that even as rents are growing faster, they remain more affordable than owning.”