The Light: Now Tracking $50+ Billion of Capital Flooding SFR and BTR Sector

The Light: Now Tracking $50+ Billion of Capital Flooding SFR and BTR Sector

Back in October 2021, we published an article identifying $30 billion in capital chasing strong single-family rent growth. Only 3 short months later, that number has increased to over $50 billion.

Breaking it out by year, below is the growth in capital announcements from 2020–present:

  • 2020: $3 billion
  • 2021: $45 billion
  • 2022 (year to date): $5 billion

Note: $50 billion translates into 125,000 homes at today’s median resale value of about $400,000. Since some of this is only the equity investment and excludes the debt (and we know of far more than this that is not public info), we believe the number of homes that could be built and/or purchased far exceeds this. 125,000 homes would be less than 1% of today’s single-family rental homes.

Single-family rental and build-to-rent (contiguous rental home communities) continue to appeal to investors looking for yield and an inflation hedge. Homes should be a hedge against inflation because the cost of their materials is rising while rents should grow along with inflation as well. Also, rental homes have been historically less volatile during housing booms and busts.

Recent rent growth has varied a lot by market. While the country has averaged 4.6% rent growth, rents in the 20 largest single-family rental markets have increased 10% YOY, another reason why investors flock to the space

New lease effective rents continue to rise, with several popular in-migration markets producing double-digit rent growth over the last year, according to our Burns Single-Family Rent Index™ (BSFRI).

Top SFR markets with double-digit new lease effective rent growth include:

  • Phoenix (+12% YOY)
  • Charlotte (+11% YOY)
  • Las Vegas (+11% YOY)
  • Atlanta (+10% YOY)
  • Jacksonville (+10% YOY)

Several of the largest SFR firms have been able to raise rents on vacant homes much faster than this.

To learn more about the single-family rental and/or build-to-rent market, fill out this form or contact Danielle Nguyen, and we can show you our research membership content or put you in touch with the right consultant.

Danielle Nguyen If you have any questions, please contact Danielle at (949) 735-2521 or by email.