Through the eyes of the single-family rental lobby


Wire Housing: What is the objective of the National Rental Housing Council?

David Howard: We are a professional association representing the single family rental industry. We do a lot of the legislative and regulatory work.

We are a relatively young organization (founded in 2014), which reflects the fact that the single-family home rental industry is relatively young.

Over the past 12-18 months, we’ve also focused on issues arising from the Covid crisis, including moratoriums on evictions, rent controls, and rent assistance. Lately, we have worked with various lawmakers in our DC offices on homeownership and affordability issues.

HW: You say it’s a relatively young industry. Is it true to say that the single-family rental industry got its start after the housing bubble burst in 2008?

DH: The single family home rental business has been around for as long as I can remember. Certainly, the great financial crisis accelerated the growth and development of the single family home industry.

From 2007 to 2014, institutions accounted for about 2% of homes purchased as a result of foreclosures and short sales, which represents over five million homes. This period got things going for the industry. There were very few people actually buying houses, and house prices started to drop. The investors have come in and I think we’ve created a floor for the real estate market.

HW: How did you arrive at the figure that your members own 261,000 single-family homes?

DH: At the end of the year, we ask our members to provide a count of state owned properties. We already have past statistics and have a pretty good idea of ​​the inventory of some publicly traded companies. When companies sign up, they commit in writing to accurately self-declare. I have no concerns about the validity of the data.

HW: Major institutional investors who are not members?

DH: Yes, Amherst Properties and they have a portfolio of approximately 35,000 properties nationwide.

HW: Okay, that’s a small part of the market, but your members could make a significant dent in some areas, including iBuying.

You’ve already said that iBuyers sold “less than 4,000” homes to institutional investors in the first nine months of this year. But, if you add up all the houses that Zillow, Open door, and Offer block – the top three listed iBuyers – say they have sold in the first nine months of 2021, the total is 22,964.

Now, that doesn’t include the iBuying universe. There is Redfin (who said he was not reselling the properties directly to private investors) and Keller Williams has an iBuying program, for example. But 4,000 is 17% of 23,000, which is probably significant. And that does not include the sale of 2,000 homes by Zillow to Pretium Partners and any additional sales to commercial investors that they may undertake while terminating iBuying.

This also dovetails with Offerpad publicly acknowledging that sales to institutional investors fluctuate around 10-20% of total sales per quarter.

So when institutional investors are looking to buy, do they often turn to iBuyers?

DH: I wouldn’t say that we really saw that in the first three quarters of 2021.

Most of the iBuyings our members engage with come directly from MLS [Multiple Listings Services, largely owned by local realtor associations and aggregated to the public by Zillow and other listings websites]. It really is because businesses need to understand the market firsthand. They really need to be part of the communities.

Our companies are very methodical in their iBuying. They find local real estate brokers and use them over and over again to buy new homes. Companies have found this to be the most effective new way to expand their portfolios.

HW: Another area where your members are arguably having a greater impact is that of certain states and cities. These tend to never be northeastern cities, rarely Midwest or West Coast cities, and usually Arizona, Texas, or the Southeast.

Why these disparities in the location of single-family rentals?

DH: We have grown in places like Charlotte, Raleigh [North Carolina] and Atlanta was a good market, as was Texas. If you look at the economic and demographic trends in these markets, it’s population growth and the arrival of millennials in those markets.

And, so, a lot of times when someone moves into town, the first thing you do is rent. Intuitively, it makes more sense to hire first. Businesses don’t buy homes in a market where there is no demand. Businesses don’t create demand, it’s migration patterns.

HW: The National Housing Rental Council seems to be on the right track, because while praising the virtues of your members, you seem to play down their role. I first heard about your group through a report you made on minimizing the number of single family rentals. Why such an emphasis on the apparent lack of impact of your group?

DH: Recent headlines suggest that large companies have entered the single-family housing market. And some of the stories have been really amazing. So we decided that we had to be more transparent.

It was important to point out what was out of context. The point is, there are 23 states in our country where our members do not own a single house. I recently spoke with an American senator, whom I will not name, and she was concerned about the home buying activities of businesses in her state. I had to tell him that our members don’t own a single property in his state.

HW: Well, I think there is concern that businesses already have a significant share of the multi-family market and are now turning to single-family homes, although I can see your frustrations with items that exaggerate your members’ inventory.

Yet what about the argument that any inventory held by your members is contributing to the inventory crisis in real estate?

DH: There seems to be an assumption that everyone in the country wants or has to buy a house.

Our members help put people on the path to homeownership. For example, we offer formal credit counseling programs. Living in a single-family rental does not prepare you to be a lifelong tenant.

In addition, supply is as much of a challenge in the rental housing market as it is in the owned housing market. The Census Bureau produces data that shows how many dwellings are occupied by owners versus renters. Over the past five years, it has shown that the number of owner-occupied dwellings has increased by 10% while the number of renters has increased by 1%. The total number of owner-occupied dwellings eclipses rental housing. (In the third quarter, there were 140.9 million housing units in the United States, according to the Census Bureau and 126.7 million dwellings were occupied. The census reports that 85.4 million units were owner occupied and 41.2 million units were rented.)

The inventory of rental housing poses as many problems as that of owner-occupied housing.

HW: Let’s end where you started, which is your group’s legislative agenda. You mentioned the moratoriums on evictions. Has the National Rental Home Council pushed for evictions to continue amid the pandemic?

DH: No, we never spoke out publicly against the moratoriums on evictions, even though it was very difficult for small owners. But it has been an exceptionally difficult time for many people.


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