The great recession has led to the increasing suburbanization of America’s rental housing, especially in southern and western cities. Since 2007, a recent study by Harvard reports more than 3.0 million single family homes in the United States have been converted from owner-occupied to rental stock, many of them in the suburbs.
Since the great recession, some large scale investors have each bought up to 10,000 – 20,000 single family homes, mostly in the Sunbelt to manage and rent. The Harvard study notes:
While systematic information is hard to come by, CoreLogic found that institutional investors (defined as those acquiring at least five foreclosed properties or using a corporate identity) were most active in 2012 in Miami, where they bought 30 percent of foreclosed properties, followed by Phoenix (23 percent), Charlotte (21 percent), Las Vegas (19 percent), and Orlando (18 percent).
In the South and West, where cities are newer, have been growing the fastest, and where the great recession hit the hardest, rental housing is now predominately in the suburbs and exurbs, not in the central city.
What is also interesting is a lot of suburban rental housing is “hidden.” Nearly four in ten rental units in American suburbs are in single-family homes and small buildings with fewer than nine units. Forget about the image of towers in the park, more people rent a house than an apartment in a tower.
The variations in the type of housing and location are yet again another reminder that the 21st century “suburb” are diverse places and becoming increasingly more diverse as investors and owners build new rental housing and convert and renovate older housing.
Unfortunately, the growing number of rental units is not nearly enough to match the demand for rental housing, especially affordable rental housing. According to the report there is an astounding shortage of 4.9 million affordable units in the United States. In 2011, 11.8 million renters with extremely low incomes competed for just 6.9 million rentals affordable at that income cutoff.
As the report concludes:
It is hardly hyperbole to call the growing lack of rental affordability a crisis. More than half of all renters pay more than 30 percent of income for housing, including more than one in four that pay more than 50 percent. For the nation’s lowest-income families and individuals, the situation is especially dire, with more than seven out of 10 paying more than half their income for rent.