The inventory of rental housing is expanding, according to an annual status report on the nation's housing market, but not because developers are jumping on the bandwagon. New construction of rental units remains well below the annual averages of the past two decades.
Rental inventory is expanding because single-family homes are being converted from owner- to renter-occupied, according to The State of the Nation's Housing 2013. Between 2009 and 2011, this type of conversion added more than 1 million single-family homes to the rental stock. "Small investors and local property owners continue to own the vast majority of the nearly 14 million single-family rentals nationwide," notes the report. "But since 2011, large investment pools have acquired single-family homes on an unprecedented scale with the intention of managing the properties as rentals."
The outsized growth of the rental market over the past few years won't last forever, and the report describes a possible future scenario: "As the homeownership market recovers, renter household growth will very likely slow and rental markets will have to adjust accordingly. Since much of the increased demand for rental housing has been satisfied by the expanded supply of single-family rentals, future market adjustments may come from a return of these units to owner-occupancy."
Source: Joint Center for Housing Studies of Harvard University, The State of the Nation's Housing 2013
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