Good data on single family rentals is hard to find, despite the billions being spent by small and large investors alike to convert defaulted homes into rentals with the expectation tenants will want to live in them for a long time to come.
That’s why the findings of a new survey released Monday are so remarkable. For years investors and landlords have been forced to rely on vacancy and other information about tenants that was really about apartment dwellers. The new survey shows how they differ in several important ways.
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The Difference Between Single Family Renters and Apartment Renters
Perhaps the most important difference is that single family home tenants are more likely than apartment tenants to stay in their current homes five years or longer, which suggests that demand for single family homes, the fastest growing rental category, will be more stable than multifamily demand.
One of every four single family tenant plans to stay in place five years or more compared to one out of five apartment dwellers, according to thenational survey of renters, conducted by ORC International for Premier Property Management. Founded in 1938, ORC International is a leading global market research firm and since 2007 has conducted the CNN|ORC International poll.
Stronger Ratings for SFR Property Management
One factor contributing to single family stability could be high marks renters give the quality of single family property management. Some 80 percent of tenants in single family rentals said their property management was good or excellent compared to only 63 percent of apartment renters
“With the emergence of the single family rental option, American families have a new housing choice that brings them the aspects of associated with owning their own homes important to families such as living space, privacy, safe neighborhoods and the sense of community— without the cost and risks of homeownership. Single family rentals can be found in virtually every community today and more and more families are choosing single family rentals either as a temporary stop on the road to becoming homeowners or as a permanent solution to their housing needs,” said Chris Clothier, director of sales & marketing and partner of Premier Property Management.
Half of Renters Plan to Buy
Over half of renters said they anticipate becoming homeowners in the next five years. Families with three or more members and children under 13 were more likely to become homeowners than those who don’t plan to become owners.
Clothier said near term interest in becoming homeowners among single family tenants reflects the new roles single family rentals are fulfilling as a stepping stone to homeownership for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosures but who plan to buy again when they can afford to do so.
Rental Lifestyle, not Financing, Keeps Renters from Homeownership
Despite reports that difficulties getting financing are keeping many U.S. renters from becoming homeowners, the survey found that the inability to get a mortgage ranks only third of among the reasons renters don’t plan to become homeowners. Among those who do not anticipate becoming homeowners (43 percent of all renters), 29 percent say they can’t get a mortgage. More renters report that they don’t want to buy a home because they enjoy being renters or they simply don’t want to be homeowners.
Short term turnover rates for both multifamily and single family rentals over the next two years are slightly more than half of all renters. Apartments typically experience an annual 50 to 60 percent tenant turnover.
The survey also found:
- Single family renters make more money and are nearly twice as likely to have children as apartment dwellers. Median income for a single family renter is $75-100,000 versus $50,000-75, 000 for a multifamily tenant. Single family households are larger; some 65 percent have three or more members compared to 32 percent of apartment households. Two-thirds of single family households include children; only 34 percent of apartment renters have children living with them.
- Compared to apartment dwellers, single family renters value neighborhood features important to children, such as parks and playgrounds, good schools and safe neighborhoods.
For more information about the survey is available online at go to http://www.memphisinvest.com/national-renter-survey-2013 and http://www.premierpropertymemphis.com/national-renter-survey-2013