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Rental Prices for Single-Family Homes on the Upswing, by Harold Willig


A relatively new form of debt security is the Single Family Rental Securitization. These debt securities are backed by the rent checks from a portfolio that may include thousands of single-family rentals purchased by institutional investors.

Morningstar recently analyzed the trends of 24 single-family rental securitizations with about 93,000 properties. The findings paint a positive portrait for investors, institutional and private, about trends in the single-family home market:

1. Rents have increased during the past year, particularly for 3-and 4-bedroom homes. According to Morningstar, rents for properties that backed single-family rental securitizations increased 5.4% alone in June 2016.

2. Vacancies rose for the third straight month said Morningstar, “due to a higher number of lease expirations in preceding months.” Nevertheless, the nationwide vacancy rate remained low at 4.7%.

3. Delinquency rates averaged only 0.5% as of May 2016. “While the retention rates remained strong for full-term leases, the retention rate on month-to-month leases showed some deterioration as of the end of May.”

Click here to read the full Morningstar study.

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