Yesterday, we posted on the surge of new household formations that have occurred in the last twelve months and that are projected to reach boom numbers over the next twelve months. Will these new households be renting or buying? A recent study, The National Survey of Renters, from The Opinion Research Corporation reveals that many will be taking an option few had access to in the past – renting a single family home.
Are There Many Single Family Rentals Available?
The study reports that the number of single family house rentals has skyrocketed over the last several years:
“Single -family rental homes are the fastest growing housing option in America. Some 52 percent of all rental buildingss in the U.S. are single-family homes, housing 27 percent of all renters. Most, 3.6 million, were originally built for owner occupancy but passed into the ranks of rentals when their owners lost them through foreclosure.”
With approximately one million homes still in some form of foreclosure, these numbers will probably continue to increase.
How Do Single-Family Tenants Differ from Multi-Family Tenants?
There are distinct differences between the two different types of tenants. The report reveals:
- Single-family renters make more money as apartment dwellers. Median income for a single-family renter is $75,000-$100,000 versus $50,000-$75000 for a multi-family tenant.
- Single-family renters are nearly twice as likely to have children as apartment dwellers. 63 percent of single-family households include children; only 34 percent of apartment renters have children living with them.
- Single-family households are larger; some 65 percent have three or more members compared to 32 percent of apartment households.
- Most single-family tenants are older, aged 35-44 (53%) compared to 14-34 (46%) and 65+ (61%) for apartment dwellers.
- Compared to apartment dwellers, single-family renters value neighborhood features important to children, such as parks and playgrounds (65% to 71%), good schools (72% to 82%) and safe neighborhoods (97% to 98%).
Do These Tenants Plan to Buy a Home in the Future?
The report explains that tenants living in a single-family house ‘enjoy’ their experience more than those in multi-unit buildings. However, most do have plans to purchase a home in the future.
- 60 percent of single-family renters compared to 44 percent of apartment dwellers said they anticipate becoming homeowners in the next five years.
- Families with three or more members (64%) and children under 13 (69%) were more likely to become homeowners.
- The near term interest in becoming homeowners among single family tenants reflects the new roles single family rentals are fulfilling as a stepping stone to homeownership for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosures but who plan to buy again when they can afford to do so.
It will be interesting to see how this new type of tenant adopts to renting a single-family residence.
