An Outlook on Single-Family Rental Investments

What’s In store for the Single Family Rental Market?

The outlook for the single-family rentals (SFR) sector remains positive, even though deal volume is expected to remain slow according to a recent SFR Comprehensive Surveillance Report by Kroll Bond Rating Agency (KBRA).

The agency recently completed a comprehensive surveillance review of its rated universe of 22 outstanding single-borrower SFR securitization and upgraded the ratings for five of the securities issued in connection with Colony Starwood Homes that merged with Invitation Homes in 2017.

The report, which gives a detailed overview of the sector as well as the SFR securitization rated by KBRA, indicated that while the SFR rental rates have steadily increased since its issuance of the first single borrower SFR securitization in 2013, vacancy rates of the 22 outstanding securitization under KBRA have averaged 4.4 percent, a decrease from 5.1 percent last year.

“The future demand for single-family rental housing will continue to be driven by the affordability of rents relative to homeownership costs as well as the availability of mortgage financing,” KBRA said in its report. Additionally, the low unemployment rate in the current economic cycle has had a favorable impact on the SFR market.

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