When we all believed that working from home was a passing trend, do you recall? It continues to influence people’s housing choices, and boy, has it shaken up the SFR market. Build-to-rent developments and institutional investors’ growing interest are giving an already dynamic market new dimensions.

Speaking of change, have you heard about these build-to-rent communities popping up? We’re about to dive into seven trends that are turning the SFR world upside down in 2024.

1. Continued Strong Demand for Single-Family Rentals

Single-family rentals are experiencing robust demand as more people turn to renting homes instead of apartments or purchasing property. Here’s why:

• Millennials Starting Families: Many are now seeking larger living spaces for growing families but are not yet in a financial position to purchase homes.
• Economic Uncertainty: With the job market still unpredictable in some areas, renting offers greater flexibility for those who may need to relocate.
• Rising Interest Rates: With high interest rates, fewer people qualify for home mortgages, driving demand for single-family rentals.
• Suburban Shift: Renters are increasingly favoring suburban areas for spacious homes and quiet neighborhoods.

These factors are fueling the ongoing popularity of single-family rentals.

2. Rising Rental Rates: What’s Driving Single-Family Home Rent Growth?

Single-family rental prices have been rising at a pace faster than apartment rents. In fact, single-family rents grew 3.9% in 2024, surpassing the historical average.

Why? Here’s why:

• Increased Demand: As millennials start families, they’re renting more single-family homes.
• High Home Prices: With home prices and mortgage rates remaining high, buying isn’t feasible for many, leading to a surge in demand for rentals.
• Geographic Variability: Some cities are seeing rents rise more than others, especially in areas like Cleveland and Indianapolis, where rents have increased by 7-8%.

This upward trend in rental rates is expected to continue as demand remains strong.

3. Shift Towards Suburban Markets

People are looking for more space, and they’re finding it in the suburbs. The pandemic kicked this trend into high gear, and it’s still going strong. Renters want bigger homes, yards, and a bit of breathing room from their neighbors. They’re also after better schools and a sense of community that some find lacking in urban areas.

Here are the key points driving this suburban shift:

• More space for less money: Suburban rentals often offer more square footage and outdoor space at lower prices than city apartments.
• Remote work flexibility: With many companies sticking to remote or hybrid work models, living close to the office isn’t as crucial as it used to be.
• Family-friendly environments: Suburbs typically have better-rated schools and more family-oriented amenities, attracting renters with kids.
• Safety perceptions: Some renters feel suburban areas are safer than city centers.
• Desire for nature: Easy access to parks, trails, and green spaces is a big draw for many renters.
• Less density: After the pandemic, some people prefer less crowded living situations.
• Potential for future homeownership: Renting in the suburbs can be a stepping stone to buying a home in the same area later.

Investors are taking notice, buying up suburban properties or building new ones specifically for renters. It’s not just individuals either – big investment firms are getting in on the action, seeing the potential for long-term growth in these areas.

4. Technology Integration

Technology is becoming a big deal in property management. It’s not just a nice-to-have anymore; it’s pretty much essential if you want to stay competitive. Property managers and landlords are using tech to make their lives easier and to give tenants a better experience.

Here are the key points:

• Smart home devices
• Property management software
• Virtual tours
• Online portals
• AI and chatbots
• Data analytics
• Automation

The cool thing is, this tech isn’t just for the big players. Even small landlords can use these tools to make their rentals more attractive and easier to manage. It’s all about making things smoother for both the landlord and the tenant. Plus, with more people wanting to handle their rental stuff online, having this tech in place is becoming a must-have for many renters.

5. Focus on Sustainability

So here’s the scoop: more and more renters are getting eco-conscious, and they’re looking for homes that match their green values. We’re talking about houses with energy-efficient appliances, solar panels, smart thermostats, and all that good stuff.

Landlords are catching on to this trend and starting to upgrade their properties. They’re swapping out old appliances for energy-efficient models, improving insulation, and even installing things like low-flow showerheads to save water. Some are going all out with rainwater harvesting systems or greywater reuse programs.

But it’s not just about the house itself. Renters are also looking at the bigger picture. They want to be in neighborhoods that are environmentally friendly too. Think bike lanes, nearby public transport, and easy access to recycling facilities. Some landlords are even getting their properties certified with green building standards like LEED to show they’re serious about sustainability.

And get this – being green isn’t just good for the environment, it’s good for business too. Eco-friendly rentals are becoming more attractive to tenants, which means they’re often willing to pay a bit more or stick around longer. Plus, these upgrades can increase the property value in the long run.

6. Rise of Build-to-Rent Communities

Build-to-rent communities are neighborhoods of homes built specifically for renting, not buying. They’re becoming a big deal in the housing market. In 2023, a record 27,500 build-to-rent homes were completed, which is 75% more than in 2022. That’s a huge jump. And it’s not slowing down – there are over 45,400 more of these homes under construction right now.

Here’s what you need to know about this trend:

• Growing fast: Build-to-rent homes made up 7.9% of all single-family housing starts in 2023, which is a record high.
• Popular locations: Phoenix, Dallas, and Atlanta are the top three metro areas for build-to-rent construction.
• Appealing to renters: These communities offer the feel of a single-family home with the flexibility of renting.
• Amenities galore: Many of these communities come with shared amenities like fitness centers, pools, and parks.
• Investor interest: Big investors and real estate investment trusts (REITs) are pouring money into this sector.
• Meeting demand: These communities help address the housing shortage by providing more rental options.
• Changing demographics: They’re popular with millennials starting families and older adults looking to downsize.

The cool thing about build-to-rent communities is that they’re filling a gap in the market. People want the space and privacy of a house, but maybe they can’t afford to buy or don’t want the commitment of owning. These communities give them that option.

7. Increasing Investor Interest

The single-family rental market is experiencing a notable surge in investor interest, a trend that is expected to continue through 2024. Institutional investors, including real estate investment trusts (REITs) and private equity firms, are particularly active in this space, allocating significant capital to acquire and develop single-family rental portfolios.

The appeal of single-family rentals as an investment asset class is further bolstered by demographic shifts, such as millennials starting families and seeking more space, as well as the ongoing challenges in housing affordability that make homeownership elusive for many.

Moreover, the integration of technology in property management and the focus on sustainability in newer developments are making these investments more efficient and appealing to environmentally conscious tenants.

Final Thoughts

The single-family rental market in 2024 is characterized by dynamic trends that present both opportunities and challenges for landlords, investors, and tenants. The focus on sustainability and the rise of build-to-rent communities further demonstrate the evolving nature of this sector. As the market becomes more complex, it’s crucial for property owners and managers to stay ahead of these trends and adapt their strategies accordingly.

To effectively navigate these changes and streamline your property management process, consider exploring Loomlease, a comprehensive property management software designed for self-managed landlords. Loomlease offers a range of features to automate rent collection, streamline maintenance requests, and provide valuable insights to optimize your rental business.

Visit Loomlease today to start your free trial and experience how Loomlease can help you save time, reduce manual tasks, and maximize your rental income in this evolving market.