A new study of luxury single-family rentals (SFRs) by Point2Homes.com has found that demand for single-family homes for rent is exploding, with the build-to-rent stock having nearly quadrupled compared to three years ago.
According to a recent RentCafe analysis of Yardi Matrix data, in 2023, a total of 27,500 houses for rent were completed, representing a 75% year-over-year increase. Currently, there are nearly 45,500 single-family homes for rent are under construction across the country.
As the pandemic gripped the nation, the need for more spacious surroundings away from major U.S. metros grew, as remote work situations became the new normal for many. When people became aware of their need for space and privacy, the numbers of single-family homes for rent nearly doubled with each year that passed.
According to U.S. Census data, 10.9 million renters lived in single-family homes in 2001, making up just under 30% of all renters. By 2022, there were 14.3 million single-family renter households, accounting for about 32.5% of all renters. Despite recent decreases, there were still 3.5 million more single-family renters compared to two decades earlier.
Breaking down the market
For Point2Home’s study, inventory of single-family homes for rent in the 100 largest U.S. cities was analyzed, taking into consideration the cities with at least 50 listings (all 100 cities qualified). The minimum number of listings was set to make sure the two luxury price categories have a sizable number of listings. Based on prices, there were two categories of luxury houses for rent taken into consideration:
- Tier 1 (luxury houses for rent): Single-family homes for rent with monthly rental rates above $5,000;
- Tier 2 (ultra-luxury houses for rent): Single-family homes for rent with monthly rental rates above $10,000.
The types of properties included in the analysis of inventory were: detached single-family homes for rent and attached single-family homes for rent. Manufactured homes for rent, mobile homes for rent, and apartments were excluded.
The study found that in 24 of the 100 largest U.S. cities included in the analysis, between 10% to 74% of all single-family homes for rent available on the market fell into the luxury category, offering features and amenities that could take any renter’s lifestyle to the next level, while fewer houses for rent fell under the ultra-luxury category.
Leading the pack was Irvine, California, where 74% of all the single-family rentals on the market here are luxury homes for rent, while nearly 12% in that market fall under the ultra-luxury category.
Ranking second on the list was Los Angeles, where nearly 60% of all of the available houses for rent fell into the luxury category.
Boston reported the third highest share of luxury homes for rent, where nearly 43% of all single-family rentals fell under the luxury home category. And rounding out the top five, the San Diego market found a near 41% share of rentals as luxury markets, and ranking fifth, it was back to California where 40% of the single-family rentals qualified as luxury homes. Please see Point2Home’s list of the top 20 single-family rental markets below.
More choosing to be mortgage-free
“By choosing a single-family home for rent, they get the indoor and outdoor space they need, while remaining mortgage-free, maintenance-free and stress-free,” said the authors of the report.
The study also found that lifestyle renters, or renters by choice, are on the rise. They have been found to choose this lifestyle not because they cannot afford buying a home, but because renting better suits their current needs. Luxury houses for rent promise more space, better features and amenities, and an elevated lifestyle. According to an analysis of U.S. Census data, the number of millionaire renter households more than quadrupled (470% increase) between 2017 and 2022, while renters earning $150,000 or more reached nearly 3.8 million.
Click here for more information on Point2Home.com’s analysis of single-family rentals in the luxury home space.
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