December 5, 2022 – Recently-introduced legislative proposals by Rep. Ro Khanna and Sen. Jeff Merkley, targeting the legitimate ownership and development activities of America’s leading providers and builders of professionally-managed single-family rental homes, will instead reduce the availability of quality, affordably-priced housing for hundreds of thousands of renter households; disincentivize the building and development of new units of much-needed rental housing; further prevent families from renting housing located in neighborhoods near quality schools, employment centers, and transportation corridors; and stifle innovation and entrepreneurialism in the rental housing market.
“At a time when hardworking Americans are being squeezed by the rising costs of everyday goods and services, Rep. Khanna and Sen. Merkley have responded by proposing to limit the availability of affordably-priced single-family rental housing, ensuring sought-after neighborhoods remain off limits to families for no other reason than they choose to rent,” said David Howard, executive director of the National Rental Home Council. “The solution is to develop policies that increase the supply of all types of housing, owner-occupied and rental.”
As shown in the following chart, the cost of renting a single-family home is currently $888 less per month than the cost of owning, or $10,656 per year, the greatest differential in over 20 years, offering American families a compelling option to meet their housing needs.
Both the Khanna and Merkley proposals take aim at large providers and builders of single-family rental homes, relying on agenda-driven talking points that lack context and ignore important economic data concerning the role these companies play in today’s housing market. Consider the following:
- Institutions account for a small fraction of America’s housing. Large providers and builders of single-family rental homes own about 450,000 properties in the US. Third quarter 2022 data from the Census Bureau’s Estimate of the Housing Inventory show there are 143,613,000 residential housing units in the country, of which 43,575,000 are rental properties. This means, large institutions which own single-family rental homes account for about 0.3% of the nation’s housing and 1% of the total amount of rental housing. Said another way, 99.7% of the housing in the United States and 99% of the rental housing is accounted for by someone other than a large institution owing single-family rental homes.
In Rep. Khanna’s and Sen. Merkley’s home states of California and Oregon, large institutions own 0.10% and 0.05% of the housing, respectively.
- It is not the case that institutions have negatively impacted homeownership. Over the past five years, homeownership rates in the US have increased from 63.9% to 66.0%. According to data published in October 2022 by the Urban Institute, both Black and Latino homeownership rates increased between 2019 and 2021 – and in each case those rates exceeded that of White homeownership. Finally, in many of the metro markets where large providers and builders of single-family rental homes own greater numbers of properties, homeownership rates are higher than they were five years ago.
- America is facing a shortage of rental housing. The number of single-family rental homes in the US has been on the decline in recent years, falling from 14.5 million properties to 14.3 million between 2019 and 2021. This reflects a broader trend that has taken hold over the past few years: owner-occupied housing is increasing at higher growth rates than rental housing. Census Bureau data show the number of owner-occupied housing units in the US grew by 11.3% (8.6 million units) over the past five years while the number of rental housing units increased just 1.5% (636,000 units). This has led to a decrease in the share of rental housing in the country from 31.4% of the housing market to 30.3% during this timeframe.
