Single-Family Rental REITs: Save The Gloom And Doom

• Single-Family Rental REITs have uncharacteristically lagged this year- dipping by more than 30% - swept up by stiff headwinds across the housing industry from the historic surge in mortgage rates.
• While residential rent growth has moderated significantly over the past quarter from the record double-digit levels seen earlier this year, the recent gloomy narrative on SFR REITs appears unwarranted.
• While multifamily markets are poised to face supply headwinds from a recent surge in new development, homebuilders have pulled back from an already historically supply-constrained single-family market.
• Cooling home price appreciation and tightening credit conditions is indeed bad news for many new “start-up” entrants into the SFR scene that are learning the hard way that the SFR game is a capital-intensive business that requires significant scale to operate profitably.
• Despite the sharp rate-driven housing cooldown, household formations have actually accelerated this year, lifted by historic levels of inbound immigration and an uptick in birth rates - challenging two core tenants of housing skeptics' prognoses.

REIT Rankings: Single-Family Rentals

In the Hoya Capital Single-Family Rental Index, we track the three major SFR REITs: Invitation Homes (INVH), American Homes (AMH), and Tricon Residential (TCN) along with newly-listed Bluerock Homes (BHM) - a recent Blackstone spin-off. We also track NexPoint Diversified (NXDT) - which converted to a REIT from a closed-end fund this year - and owns minority interests in Vinebrook and NexPoint Home Trust.

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