John Burns, CEO of John Burns Research & Consulting, delivered the featured presentation in Berkadia’s August 28 Beyond Insights webinar on Navigating Market Dynamics in SFR & BTR. He was joined by Dori Nolan, SVP of Berkadia Institutional Solutions; Joel Kirstein, Managing Director at Berkadia; and Andrew Curtis, Senior Director.
The webinar focused on the current challenges and opportunities in the SFR/BTR sector due to high demand and limited housing supply. It also delved into how these market dynamics are shaping rental housing for the future and highlighted build-to-rent developments as a crucial solution to meet growing demand.
Burns emphasized that with strong rental demand and homeownership out of reach for many financially, there is a need for more rental housing options such as build-to-rent properties. Despite historically high homeownership rates in the US at 66%, there are still significant issues with supply and affordability. In March 2023 when Burns surveyed the SFR/BTR landscape, he found that there was a shortage of 1.7 million units nationwide.
However, eighteen months later during this webinar he revealed that “we have not been solving this problem – it has actually gotten worse.” The US is now undersupplied by two million units – an even more severe situation than before especially within the rental market compared to homes for sale.
One positive development mentioned was an increase in homebuilders entering into rentals which presents new opportunities for investors according to Nolan who pointed out that there are over 45 million rented households nationwide including both apartments (29 million)and single-family rentals (14million). This makes up almost half of all apartment buildings making it a significant opportunity previously overlooked due to technological limitations but now made possible through efficient processes.
Another factor contributing towards investment potential is fragmentation within this sector where institutional players like Invitation Homes or AMH may seem dominant but only control about three percentof total housing stock. The majority of supply is in the hands of owners with one to nine units, including fix-and-flippers or homeowners who rent out their first homes after moving into a second one. This presents an opportunity for professional landlords as many tenants expressed a preference to rent from larger and more established companies rather than individual landlords.
Berkadia has already seen SFR/BTR debt and sales volume increase by 35% compared to the full-year total in 2023, according to Nolan. She also noted that there has been an increase in investors underwriting, touring and bidding on high-quality assets where pricing is attractive relative to replacement cost – indicating that we may have hit the bottom of this cycle.
Kirstein added that Fannie Mae, Freddie Mac,and multiple life insurance companies are among some lending sources supporting this investment activity while large institutions use aggregation warehouse lines for shorter-term financing before eventually exiting through securitization or other means.
For those interested in watching replays of this webinar which took place on August 28th they can do so by clicking here .
