Phoenix leads the nation in rent growth at 9% YOY, nearly double the national average of 5%. While rents are increasing, vacancies remain historically low resulting in a higher return on investment for investors in the single-family residential (SFR) portfolio space.
According to John Burns Real Estate Consulting, about 95% of all SFR rental homes nationwide are occupied, the highest level in over 20 years since 1997. With only 12% vacancies in nearly two million total housing units, Phoenix is experiencing a shortage of homes. Rental prices are expected to continue to increase by 2022, even with an expected modest recession. High occupancy rates and job growth bolster the entry-level SFR rental price increases that currently average at $1,439 a month in the Phoenix area.
The demand for SFR rentals has piqued the interest of a range of investors. Established institutional investors are turning to SFR portfolio investments on a large scale over other types of commercial real estate assets. “Single-family rents tend to be more stable and less responsive to the ebbs and flows of a market or economic cycle than do apartment rents and home prices,” said Kevin Maggiacomo, CEO and president of SVN International Corp. (SVNIC), a Boston-based full-service CRE advisory firm, in a recent GlobeSt.com article.
According to SVN | SFRhub Advisors, the nation’s first dedicated SFR and BFR (Build-for-Rent) portfolio brokerage based in Phoenix, there has been a huge rise of interest among investors drawn to these portfolios for the high cap-rates, diversification, tenant longevity and overall investment security. SFRhub.com, the nation’s first, data, marketing and complete transaction commercial real estate platform dedicated to SFR/BFR portfolios, nearly tripled in new users interested in SFR/BFR portfolios in the last six months. Since the site launched in early 2019, it has acquired over $1 billion in listings, with no slowdown in sight. “We recently underwrote, in less than 12 months, the 400th SFR investment portfolio,” said Jeff Cline, executive director and principal at SVN | SFRhub Advisors. “We’ve seen huge growth in the amount of demand for SFRs, and more recently over the past two years, the Build-for-Rent sub-segment, due to the rising housing demands.” According to a recent poll by CoreVest Finance, 86% of the polled investors are actively seeking investment properties, with a majority optimistic for better investment opportunities in 2020 compared to 2019.
For more information on SVN | SFRhub Advisors or to view portfolio listings, visit www.SFRhub.com.
About SVN | SFRhub Advisors
SVN | SFRhub Advisors is an independently owned and operated SVN® office located in Phoenix. SVN has over 1,600 advisors across 200+ offices internationally. SVN | SFRhub Advisors is the nation’s first dedicated SFR portfolio brokerage providing an advanced technology acquisition, research, marketing, transaction and data platform.