Not All is Gold in the Single-Family Home Rental Market via Axiometrics

In a previous blog post, we discussed the active single-family rental (SFR) sector, pointing out that private equity investors and public REITs are snapping up single-family homes and turning them around as rentals. Given the billions flowing into the sector, it would stand to reason that SFR could become the new commercial real estate (CRE) investment class, much like multifamily has been.

The truth is that there is little danger that the single-family rental asset class will grow to the point where it overtakes apartments as an asset class. One example of this is that Colony American Homes Inc. (CAH) – the REIT that owns 9,931 SFRs – postponed its June 2013 IPO, stating unfavorable market conditions. The timing of the offering could not have been worse. Concern about the tapering off of the Federal Reserve’s monetary stimulus caused interest rates to rise, spotlighting the prospect of interest rates’ eventual rise. This resulted in a selloff in shares of real-estate investment trusts that pay most of their taxable income to shareholders as dividends.

Read more...Not All is Gold in the Single-Family Home Rental Market