We have all heard the tales of the current renter migration to the suburbs and even to the exurbs in some parts of the country. Until now, the migration story captivating the housing sector has been mostly anecdotal. But we now have proof! Our recent national survey of single-family rental (SFR) operators provides hard data confirming the migration movement that has been amplified by the pandemic. Permanent work from home permissions, the possibility of more online school in the future, and the need for larger and better configured indoor and outdoor spaces are acting as the accelerants.
In our quarterly SFR survey of 175,000 institutionally managed single-family homes across 55 markets, a partnership between John Burns Real Estate Consulting and The National Home Rental Council (NRHC), we learned:
59% of new SFR tenants are relocating from urban locations, with 41% of new tenants moving from already suburban locations.
32% of new SFR tenants are moving from apartments, leading us to conclude that the industry is not stealing massively from apartments but is instead benefitting from better locations that provide value for people who prefer to live in a lower density, detached home or townhome.
Surprisingly, all-time low mortgage rates are not creating a surge in the number of SFR renters who want to purchase homes. According to the survey, 26% of SFR tenants moved out to purchase a home over the last six months—a percentage that is roughly in line with what operators indicate is a normal move-out to purchase rate historically.
We believe the migration to the suburbs will continue in the coming years. Location within the suburbs will play an important role in the success of single-family rentals. The SFR product category, including specifically built-for-rent (BFR) communities, located near hospitals, military bases, and job centers with transient but higher-wage jobs will generate strong demand, even in “next tier locations.”
If you are interested in learning more about our single-family rental research, or if you are an operator and would like to participate in our survey going forward, please reach out to Devyn Bachman (contact information below).