High Cost of Home Ownership and Elevated Inflation to Sustain Single-Family Rent Growth

Over the next two years, single-family rents are expected to grow ~200 bps higher than multifamily; despite expected growth, we believe single-family rentals will remain significantly more affordable relative to ownership.

The combination of high mortgage rates and home prices have made the cost of ownership significantly higher than the cost of renting, supporting rents. Further, while historically rent growth and inflation have been highly correlated, rent growth has outpaced Consumer Price Index (CPI) growth by a factor of 1.2x. 

Where we are seeing a key divergence between single-family and multifamily specifically is within supply challenges and shifting household demographics. In this paper, we argue that this confluence of factors should result in sustainably stronger rent growth in the single-family versus multifamily space, both in the near- and medium-term. Over the next two years, we project that multifamily rents will grow 3-5% while single-family rents are projected to grow 5-7%, or about 200 bps higher.