In the American rental market, two distinct strategies emerge single-family rentals (SFRs) and multifamily properties. Apartment List recently delved into the nuances that define these two segments, shedding light on the differing demographics, preferred lifestyles, and geographical distributions of renters.
According to data from the 2022 Census Bureau’s American Community Survey, there are approximately 43 million Americans residing in rented single-family homes, which accounts for over 40% of all renters nationwide. On the other hand, multifamily rentals, such as apartments, accommodate around 58 million renters. This stark contrast in numbers reflects not only the different living preferences but also the diverse characteristics of the occupants.
SFRs, often associated with suburban living, attract an average of 2.85 occupants per unit, residing in 2.79 bedrooms per unit. This indicates a preference for more spacious living arrangements, which are typically found in suburban areas. Conversely, multifamily buildings tend to be concentrated in denser metropolitan regions, where the average unit hosts 1.99 occupants and offers 1.59 bedrooms. The limitation of space in metropolitan areas contributes significantly to the disparity in unit sizes between the two rental types.
Demographically, SFRs cater more to families, with 42% of households having children, compared to only 23% in multifamily rentals. Additionally, only 23% of SFR households consist of single individuals, while in multifamily properties, this number rises to 47%. However, despite these differences, the median age of householders in both SFRs and multifamily units remains relatively close, at 43 and 41, respectively.
Financially, there are notable gaps between the two rental types. The median household income in SFRs/BTRs (Build-to-Rent) stands at $56,657, significantly higher than the $44,847 in multifamily properties. Despite this, both figures fall below the U.S. overall median household income of $74,580, reflecting the challenges faced by many American renters. Moreover, the rent burden rate, which measures the percentage of households paying more than 30% of their income for rent, is lower in SFRs/BTRs (43%) compared to multifamily rentals (51%).
Geographically, the distribution of SFRs and multifamily properties varies greatly across the United States. While single-family rentals flourish in the southern and western regions, where land is more abundant, they are scarce in the Upper Midwest and New England due to limited open space for construction. California, in particular, emerges as the epicenter of single-family rentals, with 10 of the 15 metros boasting the highest rates located within the state. The Central Valley of California stands out as a hotspot, where homeownership is costly relative to agricultural incomes, driving many towards the rental market.