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Single-Family Rental Outlook Remains Positive Despite 2023 Headwinds

Single-family rental operating fundamentals outperformed many sectors in 2023, but fell short of elevated expectations, Green Street says in a new report on the sector. However, the five-year growth outlook for market rent and occupancy is largely unchanged, notwithstanding the downside to ’23 estimates.

“Pandemic-related impacts on bad debt and evictions were slower to normalize than expected and weighed on top-line growth, and expense growth surprised negatively – rising nearly 10% for large institutional landlords,” Green Street said.

The Newport Beach, CA-based consulting firm expects ~4% market rent growth from 2024 through 2028 as the sector benefits from 1) a widening affordability gap between the monthly cost of owning versus renting; 2) inadequate savings for a down payment among many renters; 3) outsized 35-44 year old population growth; and 4) limited supply growth.

Although landlord pricing power should hold up, expense growth will remain a challenge. Green Street forecasts mid-7% expense growth for the sector in ’24 due to outsized real estate taxes, insurance, and accumulated deferred maintenance costs from years of low turnover. Even with high expense growth, NOI is expected to average 5% growth per annum over the next five years, which ranks toward the top of the roughly 20 U.S. property sectors Green Street covers. 

Register today for Connect Phoenix Multifamily & Single-Family Build-to-Rent, scheduled for April 18 at the Westin Kierland Resort & Spa, Scottsdale, AZ.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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