Higher Housing Costs

Are single-family rental companies the villains of the current crisis?

Today’s news often highlights an ongoing housing affordability crisis. Per-capita homebuilding has dried up relative to past decades. That scarcity of availability has given rise, often painfully, to higher home prices. With the last housing cycle bookended on one end by tight credit conditions (following the Great Recession of 2007-2009), and on the other end by high mortgage rates (from 2022-2025), homeownership feels unachievable for many Americans. Enter the single-family rental (SFR) company.

Since 2012, SFRs owned by massive real estate investment trusts or large asset managers such as Blackstone have bought hundreds of thousands of houses, adding them to the rental stock. Those large firms are often accused of driving up rents. But, if higher supply usually lowers price, what’s really happening? My research team dug in to answer this question. We tracked which homes the SFRs bought and when they bought them. As simple as it sounds, that meant months of sleuthing through SEC filings, lawsuits, and corporate records to link purchases to the many shell subsidiaries of SFRs. With the data in hand, we next disentangled the possible competing explanations. In short, we found SFRs to be highly sophisticated firms who may be following rising rents, in addition to pushing them up.

After accounting for selection into markets on an upward trajectory (i.e., the SFRs do a good job at picking neighborhoods ready to take off in rental demand), we found that SFRs’ impact on rents changed over time. Before COVID, SFR entry actually lowered rents, especially when the SFRs bought from owner-occupants and expanded the rental stock, or when they faced competition from other SFRs. However, as household members scrambled for additional space to work or learn from home during the COVID pandemic, we found that SFR entry did cause some rent increases. This suggests that SFRs were more aware of rising demand than smaller landlords, enabling them to take advantage of that trajectory to set higher rents.

In sum, SFRs aren’t the villains responsible for pushing our ongoing affordability crunch, but they’re not necessarily heroes either. Mostly, they’re responding to America’s chronic underbuilding of homes, the tightness of credit that was available after the Great Recession, and our currently high mortgage rates. They might even end up offering a boon to many families, as they provide larger, newer, and better-located rentals, allowing renter households to trade up without the need for an expensive mortgage.

Caitlin Gorback and Benjamin J. Keys. “Global Capital and Local Assets: House Prices, Quantities, and Elasticities.” Conditionally Accepted, The Review of Financial Studies.

Caitlin Gorback, Franklin Qian, and Zipei Zhu. “The Impact of Institutional Owners on Housing Markets.”