Fannie: Single-Family Rental Growth Won't Infringe on Multifamily

By: Krista Franks Brock 03/19/2012
As the government begins to tiptoe into the REO-to-rental arena after many months’ deliberation and input from thousands of industry participants, Fannie Mae released a data note on the single-family rental market.
Overall, single-family renters increased by 2.7 percentage points from 2005 to 2010, according to data Fannie Mae compiled from the American Community Survey.
However, the percentage of single-family renters varied greatly from market-to-market, with 9.8 percent in the New York City metro area and 57.8 percent in the Stockton metro area.
According to Fannie Mae, this variance is expected “because of differences in factors such as foreclosure rates, or changes in employment and median income.”
While single-family renting increased by 2.7 percentage points, multifamily renters decreased by about as much, 3 percent from 2005 to 2010, according to the American Community Survey.
This may suggest that the single-family rental sector is cutting into the market share of multifamily housing. However, Fannie Mae says “the single-family renter does not fit neatly into the age and income demographic that typically drives multifamily rental demand.”
While 43.8 percent of all renters in 2010 paid more than 35 percent of their income toward their rent, a slightly higher percentage – 44.1 percent – of those renting single-family homes spent more than 35 percent of their income on rent.
Fannie’s report points out that those ages 35 to 54 comprise 49.7 percent of the rental market, while the same age group comprises 63.1 percent of the owner’s market.
At 56.8 percent, the age group also accounts for a little more than half of the single-family rental market.
Additionally, single-family rental households are often larger than multifamily rental households.
Therefore, Fannie Mae does not expect single-family renting to infringe on the multifamily market share and attributes the recent growth in single-family renting to “an increase in vacant single-family housing, a decline in the homeownership rate, and a growing renter constituency with demand for a rental unit that provides the benefits of the single-family structure.”