Supply is the villain, not rental housing providers

Claims that investors are the problem are ignoring undersupply in metro areas like Dallas

Concerns over the presence of large companies owning single-family rental homes are also often mischaracterized and misplaced. Large single-family rental home providers own just 0.4% of the housing nationwide, and of all the rental housing in the U.S., large providers own just one percent, writes David Howard.(Tom Fox)

The role of professional single-family rental housing providers has drawn attention of late, including from The Dallas Morning News editorial board. The following counter viewpoint and data are offered for a thorough perspective on the issue.

First and foremost, any discussion of housing today has to begin with an understanding that supply, and its impact on affordability, is the primary factor holding back the market. There simply is not enough housing — of all kinds — to meet the demand from both homeowners and renters. As a result, America faces a housing deficit of between 4 million and 6 million homes.

Housing undersupply is especially acute in high growth markets like Dallas and other cities throughout Texas. Data from the Bipartisan Policy Center reveals the extent of the challenge in the state, where the population has increased by more than 4.1 million residents over the past decade, while the housing stock has grown by less than 1.5 million homes.

In this environment, claims that rental housing providers are somehow a part of the problem ignore the harmful implications of housing undersupply, whether in Dallas, throughout the state of Texas, or across the country. These claims also serve to obscure, and even misconstrue, many important realities of today’s housing market.

For example, as it relates to the impact of single-family rental home providers on the homeownership market,rates of homeownership in both the Dallas-Fort Worth area and the state of Texas are higher today than they were five years ago. And, a recent report from real estate brokerage company RE/MAX revealed the number of homes sold to individual buyers in Dallas increased 14% in 2023 from the previous year, the second highest increase of any market in the country. Not exactly indicative of an unhealthy homeownership market.

Additionally, concerns over the presence of large companies owning single-family rental homes are also often mischaracterized and misplaced. Large single-family rental home providers own just 0.4% of the housing nationwide, and of all the rental housing in the U.S., large providers own just 1 percent. In Dallas-Fort Worth, the percentage of the housing market owned by large providers is slightly higher than the national average, but at 1%, is a far cry from exaggerated claims about the outsized role of large single-family rental home providers.

The National Association of Realtors says 28% of all homes in 2021 went to institutional investors. This shouldn’t be seen as a trend since these numbers come from a highly atypical year, given the effects of the pandemic. The same report shows high rates of both in-migration and household formation in Texas, two of the primary demand drivers for rental housing

The simple fact is, America — and Texas — needs more housing of all kinds to support families no matter where they are in life. Every person, no matter their income, background or profession, deserves access to safe, quality neighborhoods, and single-family rental homes provide access to the kinds of housing many communities need. Housing, put simply, should not be viewed as zero sum. We need more supply, of all types, to help ensure we meet the needs of today — and tomorrow. And single-family rental homes are an important component for working families in any housing market.

David Howard is the chief executive of the National Rental Home Council.

This article was originally published in the Dallas Morning News on May 20, 2024.