Friday, February 14, 2025

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Single Family Rental

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Are Millennials the reason single-family home rents are off the charts? A new Zillow report looks at the numbers

It’s well past time to stop blaming Millennials for avocado toast, but a new report finds they might be driving the cost of rents for single-family homes off the charts.

Millennials have become the dominant force in U.S. real estate, but the hurdles of the housing market—in terms of both supply and affordability—means more and more families are opting to rent single-family homes rather than buy them.

A recent Zillow report shows that rents for single-family homes have skyrocketed approximately 41% above pre-pandemic levels, while multifamily rents units have gained 26% in the same time period. The typical asking rent was $2,174 for single-family homes as of December 2024, while the typical asking rent was $1,812 for multifamily units, according to the report.

“Rent growth has eased, but rents are still too high,” says Orphe Divounguy, a senior economist at Zillow. He adds that while wage growth has outpaced the gains in rent costs for multifamily units, it’s still below the rent growth rate for single-family homes.

Meanwhile, the prospect of buying a single family home is receding for many due factors including paltry inventory in many markets, surging home home values, and the challenges of saving up a competitive down payment. 

Private Capital Fuels Single-Family Rental Growth, Shifting Housing Landscape

Just under 1 in 10 homes that broke ground in the United States in 2024 was being built for a tenant, not an owner, according to John Burns Research and Consulting data. 

Investors poured a combined $57B into single-family rentals in 2021 and 2022. Capital flows slowed in 2023 as rising interest rates squeezed deals, but the sector bounced back, with investment nearly doubling year-over-year to $6.3B in 2024. Analysts expect more growth ahead. 

“This niche is only 6, 7 or 8 years old, but it gained a ton of traction, not only on the demand side from tenants moving into a purpose-built rental community but also on the development side,” said Chris Nebenzahl, vice president of rental research at John Burns. “Developers have seen that demand and have really met the demand.”

Single-family rentals have exploded into the housing market, with 124,825 new rental homes built since 2017. Unit completions have grown in each of the last six years, and 2024 set the new high-water mark for deliveries with more than 34,000 units, according to Point2Homes data, an SFR leasing platform and subsidiary of Yardi Matrix. 

Single-family rents reach record high, 20% above apartments

Rented single-family homes are the housing market’s big standout right now, with costs 20% higher than that of a typical multifamily apartment, according to the latest market report from Zillow. That’s the largest difference ever recorded by Zillow.

While stubbornly high mortgage rates are keeping a lid on buyer demand and home value growth, and a response from builders has kept multifamily rent growth stable for many months, rents for detached single-family homes continue to accelerate.

“Right now, more multifamily units are hitting the market than at any time in the past 50 years, but detached homes aren’t seeing the same surge in construction,” said Skylar Olsen, Zillow chief economist. “We’ve also got the large millennial generation wanting to move into a larger space. High and unpredictable mortgage rates and hefty down payments are pushing some to rent that lifestyle instead of buying it. Similarly discouraged, some homeowners may return to the market and sell to capitalize on record prices, rather than continue to wait for lower rates.”

Rents for single-family homes 41% higher than prepandemic

Rents for single-family homes have risen 41% over prepandemic prices, with multifamily rents rising 26% in the same time frame, according to real estate company Zillow.

A market report from Zillow found that single-family homes cost 20% more to rent than multifamily apartments, the largest difference the company has ever recorded.

Although high mortgage rates are tamping down on buyer demand, construction of multifamily buildings has kept rent growth stable, while detached, single-family homes continue to see rents increase.

“Right now, more multifamily units are hitting the market than at any time in the past 50 years, but detached homes aren’t seeing the same surge in construction,” said Skylar Olsen, Zillow chief economist.

He also pointed to the millennial generation, whose oldest members are now in their 40s, wanting to move into larger spaces.

On an annual basis, rents for detached homes grew 4.4% compared to 2.4% for apartments.

Real Estate Experts Say the Market Will Change DRASTICALLY This Year

It seems that 2025 has already been...well, a lot. And if you're thinking about buying property this year, the plot only thickens: Many states are enacting new real estate laws that will likely play a major role in how dwellers approach buying, selling, and even renting. While the news of changes isn't exactly shocking, as President Donald Trump planned to eliminate "unnecessary" regulations shortly after winning the 2024 election, you'll want to know how they affect you.

"A new administration always has an impact on the confidence or lack thereof that people have in the real estate market and their timing of when you buy or sell," says McKenzie Ryan, real estate agent and founder of her eponymous team at Douglas Elliman. "Right now, there is naturally an air of uncertainty as we wait to understand what Trump’s priorities are that may impact real estate before making any big moves."

However, Ryan says that the current state of the real estate market didn't just start with the new year or the new administration. "It has been a long journey of uncertainty since 2020," she reasoned. So what changes can we expect for the rest of 2025? Read on to learn more about the real estate trends that we're already seeing surging across the country.