Renting the Dream: The Rise of Single-Family Rentership in the Sunbelt Metropolis

Abstract

In the aftermath of the foreclosure crisis, there has been a marked shift toward renting in the United States, with a large increase in households renting single-family homes. In the 50 largest metropolitan areas, the number of detached, single-family rental homes (SFRs) increased from 3.8 million to 5.8 million from 2006 to 2015. Single-family rentership rates increased in all 50 large metro areas, with the percentage of single-family units that are rented increasing from 11.3% to 16%. Notably, the nine metropolitan areas with the largest increases were all located in the Sunbelt. Given expected neighborhood sorting, it is important to consider neighborhood increases in SFRs. In one large Sunbelt metro area, Atlanta, increases in SFRs from 2010 to 2015 were particularly large in older, inner-county diverse suburbs. Regression results show that, controlling for other neighborhood characteristics, neighborhoods with larger Asian, Latino, and black populations saw larger increases in SFRs. The effects were particularly high in neighborhoods with larger Latino and, especially, Asian populations. Another key finding is that, in neighborhoods with lower property values, more foreclosures during the crisis were associated with sizeable increases in SFRs. However, more foreclosures in neighborhoods with high property values were not associated with increases in SFRs. This is possibly due to the exclusionary nature of high property-value suburbs and the strong demand in such neighborhoods for owner-occupied housing. Implications for policy and research are considered. Since the middle of the 20th century, the United States has been a majority homeownership nation. With the expansion of the middle class after the Great Depression and the institutionalization of more affordable and accessible mortgage markets, the U.S. homeownership rate climbed rapidly from below 45% in 1940 to over 60% by 1960, and then more gradually until 1980 (Fetter, 2013; Spader, McCue, & Herbert, 2016). Since 1980 there have been ebbs and flows in the homeownership rate, punctuated with a spike in the rate from the middle 1990s to 2004, when the rate reached a peak of 69%. Since 2004, in the wake of the mortgage crisis, the rate has dropped significantly, settling at about 63%-64% since 2015. Single-family homeownership, in particular, is not just a phenomenon of household aspiration. Rather, it was the foundation of suburbanization and suburban form, with both construction financing and homeownership finance led by the Federal Housing Administration and Veterans Administration loan programs (Jackson, 1987). Arguably, the exclusion of renters, especially those of modest means, was and still is a hallmark of modern American suburbs. Localities employ fiscal and exclusionary zoning practices to build and maintain neighborhoods dominated by homeownership, especially in metropolitan areas where land is relatively more affordable (Levine, 2010; Pendall, 2000). The suburban ideal is marked by homeownership, and the physical design and organization of sub...

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