Leasing Lifestyle: In the wake of the U.S. foreclosure crisis, there has been a large increase – on the order of 50 percent – in single-family rental homes, or SFRs, across the country. As millions of families lost their homes to foreclosure, many of those homes were eventually purchased by investors – small and large– who converted those homes into rentals. At the same time, many families were compelled to rent their homes due to a foreclosure on their credit record or due to the tightening of mortgage markets.
I recently examined the growth of SFRs in the 50 largest U.S. metropolitan areas since the mortgage crisis. In all 50 metros, there was a 52 percent increase in the share of single-family homes that are renter-occupied.
The largest increases in SFRs were generally in Sunbelt metropolitan areas, such as Las Vegas (60 percent), Phoenix (69 percent), Tampa (59 percent) and Atlanta (67 percent). These metros were hit hard by the foreclosure crisis. They are also places where investing in single-family homes as rentals is relatively lucrative because of relatively weak tenant-protection laws.
In addition to many “mom and pop” landlords buying foreclosures to turn them into rentals, many of these metros also saw aggressive investing in formerly foreclosed properties by large “institutional” investors who were able to attract large-scale funding from Wall Street from about 2012 onward. Atlanta was the leading metropolitan area for Wall Street-backed investors.
The greatest increases in SFRs in metro Atlanta from 2010 to 2015 were in relatively diverse suburbs, especially in the five core counties of the metropolitan area – Clayton, Cobb, DeKalb, Fulton and Gwinnett counties. Suburbs in these counties accounted for over 60 percent of the increase in SFRs in the region, with the outer suburbs accounting for another 33 percent.