September 4, 2025

Guardian Asset Management

Single Family Rental

Newsletter

Single-family Rentals Continue to Grow

as a Desirable Asset Class

Single-family home rentals (SFR) have existed for decades, but the sector has shifted dramatically over the past several years. What once consisted primarily of individual landlords managing a handful of properties has transformed into a structured, institutionalized asset class.

Entrepreneurial firms, middle-market players and even publicly traded companies now see SFR as an essential component of the housing market. That evolution reflects deeper demographic, economic and cultural changes in how Americans approach home life, mobility and financial commitments.

Households that once would have transitioned from apartments into homeownership are increasingly extending their rental years. Rising mortgage rates certainly play a role, but the demand for SFRs predates the recent rate environment.

Mega Investors Are Snapping Up Properties

in These Popular Metros—

Including an Infamous Crime-Ridden City

roperty investors are buying up nearly one-third of listed residential properties across the U.S.—with a new wave of "mega investors" on track to gain an impressive property monopoly in several major metros, including the crime-ridden Tennessee city of Memphis.

According to a new report from real estate analytics firm Cotality, which examined the sale of single-family homes and townhouses purchased between January and June 2025, these mega investors account for a sizable share of homes being bought up in several "sweet spot" cities, where prices remain relatively low—as demand continues to strengthen.

The report reveals that, in January, investors accounted for 32% of single-family home purchases. And while the share of investors had dropped to 29% by June, that percentage was still much higher than the same time in 2024, when investors represented only 25% of all purchases. 

The Stagnant U.S. Homeownership Growth

and Its Impact on Real Estate and Rental Markets

U.S. homeownership rates stagnated at 65% in Q2 2025, the lowest since 2019, despite 45% home price growth since 2020.

- High mortgage rates (7%), limited entry-level supply, and wage gaps drive younger generations toward renting, with urban renter households growing 3x faster than owners.

- Rental markets outperform single-family investments, showing 2.7% annual growth through 2025, fueled by urbanization, remote work, and suburban demand for family-friendly spaces.

- Urban multifamily properties in cities like Chicago and Cincinnati see 7.4% rent growth due to constrained supply, while Sun Belt oversupply drives price declines in Austin and Jacksonville.

- Investors are advised to prioritize multi-family and suburban 3+ bedroom units in markets with job growth and limited construction, as demographic shifts reshape housing preferences.

Multifamily Demand Surges as

Single-Family Market Falters

A steady increase in listings is guiding home sales to a six-month high as the figure rose 1.1% year over year in July, according to a Marcus & Millichap analysis.

Added options for prospective buyers have put downward pressure on home prices, with medians inching up only 0.3% over the past year, the smallest margin since late 2023. Recent downward movement in mortgage rates to 6.58% on a 30-year fixed mortgage from 6.96% earlier this year may encourage more sales, according to Marcus & Millichap.

The new home market is showing clearer signs of softening with greater downward pricing pressure. Although the number of new single-family houses for sale in July reached a 20-year high, the actual number of purchases has been falling on an annual basis since the end of 2024, according to the report. This led to a 6.2% annual decrease in the median sale price to below $400,000 for the first time since September 2021.

Stumbling Blocks to Ownership Still Boosting BTR

Construction of new single-family rental houses slowed a bit in the second quarter. But the sector will remain “an elevated share” until newly built for-sale properties become more affordable.

That’s the word from the chief economist at the National Association of Home Builders, who said that builders and investors are facing the very same problems as folks who want to buy—high prices and high financing costs.

“In the near-term, single-family built-for-rent construction is likely to slow until the return on new deals improves,” said economist Robert Dietz. But “given affordability challenges in the for-sale market, the SFBFR market will likely retain an elevated market share.”

How long those stumbling blocks to ownership remain in place remains to be seen. But in the meantime, single-family rentals will continue to be a source of inventory for would-be buyers and renters yearning for a house with more space and backyards, Dietz said.

U.S. Investor Home Purchases Fell 6%

in the Second Quarter,

the Biggest Decline Since 2023

U.S. real estate investors purchased roughly 52,000 homes in the second quarter, the lowest level for that time of year since 2020, according to a new report from Redfin, the real estate brokerage powered by Rocket. That’s down 6% from a year earlier, the biggest drop since the fourth quarter of 2023.

The report is based on a Redfin analysis of county-level home purchase records across 39 of the most populous U.S. metropolitan areas going back through 2000. Redfin defines an investor as any institution or business that purchases residential real estate, meaning its report covers both institutional and mom-and-pop investors.

Real estate investors are pulling back for similar reasons individual homebuyers are pulling back: high borrowing costs, elevated home prices and economic uncertainty.

It’s more expensive for investors to finance their purchases than it has been in the past. Even though most investors pay in cash and don’t take out mortgages to buy homes, they often take on other loans to fund things like renovations, and interest rates are much higher than they were during the pandemic. Additionally, home prices remain near record highs.