The single-family rental market provides housing to 25 million Americans and is valued at more than $4 trillion. In fact, it’s the largest source of rental housing in U.S., and plays a particularly important role in rural areas where they account for two-thirds of the rental housing stock, according to “Single Family Rental: An Evolving Market” a white paper from Freddie Mac. It found that the secondary market for SFR home loans is limited.

“The single-family rental market is an important segment of the housing market and the data reveal it to be an affordable housing option for many American families,” said Steve Guggenmos, vice president of multifamily research and modeling. “Much of the single-family rental market is primarily driven by small investors, and there is not a uniform set of terms and credit standards for loans on SFRs. Freddie Mac’s pilot program in this space sought to demonstrate how secondary market infrastructure focused on SFRs might benefit the marketplace.”

The most important takeaways from the report are as follows:

• The SFR market makes up about half of the overall rental market. It is the single largest segment of the rental market by valuation and households served.
• Small investors dominate the SFR space. The overwhelming majority of SFRs are owned and operated by individuals or very small investors.
• There is a slow-growing middle-tier investor market with further potential for growth. Large-scale institutional investors are a new entry into the market but are limited to a select few firms that own approximately 1 percent of SFRs.
• Secondary market opportunities for SFR loans are limited. Apart from these select few institutional investors with access to the capital markets, there are limited secondary market opportunities for SFR loans with middle-tier investors that would provide liquidity and stability, and there is not a uniform set of terms and credit standards for loans on SFRs.

The pilot included both middle-tier investors and affordable homes in select large-investor portfolios and demonstrated how a secondary market infrastructure focused on SFRs affordable at 80 percent of the area median income could be created and operated, particularly for middle-tier investors, according to Freddie Mac.

Security Properties and Tokyu Land US Corp., purchased Sanctuary, an apartment building located in Portland, Ore., for $58,300,000. Built in multiple phases, the $1.9 billion South Waterfront community is one of the largest urban redevelopment projects in the nation.

Sanctuary has 182 units and is located along the Willamette River on the southern end of Portland, Oregon. Given Sanctuary's proximity to downtown Portland as well as public transportation, residents can commute to all the key employers in the, including Under Armour, Portland State University as well as Google, Oracle, and Jama Software.

“Our asset is well positioned for growth and we look forward to unlocking value for our investors with this core acquisition,” said Davis Vaughn, senior director of investments at Security Properties. "Sanctuary has an irreplaceable location along the river that will give it a permanent competitive advantage.”

"We identified Portland as a growth market for us earlier in 2018,” said Nobuhide Kashiwagi, president of Tokyu Land US. “This asset is a great addition to our growing multifamily portfolio, and we are looking forward to continuing our acquisitions in the Pacific Northwest. Sanctuary's superior location provide us with a stable foothold upon which to grow."

Residential building in November was $327.5 billion (annual rate), down 1% from October. Single family housing was unchanged from its October pace, staying basically at the plateau that’s been present for much of 2018. Multifamily housing receded 3% in November following its 20% rise in October, according to Dodge Data & Analytics.

“Amidst the monthly ups-and-downs, the construction start statistics show that on balance the construction industry expansion was still underway in 2018, although the rate of growth has slowed considerably from the 7% gains for total construction reported during 2016 and 2017,” said Robert Murray, chief economist for Dodge Data & Analytics. “With regard to residential building, multifamily housing has seen renewed growth in 2018 after its loss of momentum in 2017, but single-family housing has essentially plateaued following the advances registered at the outset of 2018.”

There were 10 multifamily projects valued at $100 million or more that reached groundbreaking in November, compared to 13 such projects in October. The large multifamily projects in November included the $215 million Victory Park Apartments in Dallas, the $200 million Spring Street North block development in Seattle, and the $160 million multifamily portion of a $190 million mixed-use development in Philadelphia. The top five metropolitan areas ranked by the dollar amount of multifamily starts in November were--New York, Washington, Boston, Los Angeles, and Seattle.

During the January-November period of 2018, residential building increased 6% compared to last year. Single family housing advanced 6%, showing some deceleration relative to the 9% gain reported during the first eleven months of 2017. By major region, this was the 2018 year-to-date pattern for the dollar amount of single-family housing--the West, up 10%; the South Atlantic, up 6%; the South Central, up 5%; the Midwest, up 2%; and the Northeast, unchanged from its 2017 amount.

Multifamily housing climbed 8% year-to-date, rebounding after the 7% decline reported during the first eleven months of 2017. Through the first 11 months of 2018, the top-five metropolitan areas ranked by the dollar amount of multifamily starts, with their percent change from a year ago, were New York, up 3%; Boston, up 80%; Washington DC, up 28%; Miami, up 46%; and Seattle, up 29%. Metropolitan areas ranked 6 through 10 were Los Angeles, down 25%; San Francisco, up 20%; Dallas-Ft. Worth, up 33%; Atlanta, down 17%; and Philadelphia, unchanged from its 2017 amount.