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The 2021 rental property sector is still a source of optimism for property rental investors, and single-family homes are getting some time in the limelight. Outside of high-density housing, there is a larger renter base and an increase in the demand for tech-based management and smart homes. Plus, investment properties are still safer than most other investment forms right now. 

Let’s examine the demand within the single-family rental market and whether these homes are having a moment or getting some well-deserved attention for their investment ROI. 

Single-Family Rental Market

Prices for single-family homes were up by 10% as of February 2021. They are still rising at a clip last seen in 2006, across the board. Prices have seen the steepest rise at the lower end of the market, where supply is much leaner. That means affordability has weakened substantially. This weakened affordability is the key factor in the slowdown of home sales and the increase in the rental market. 

Construction and home building are happening at lightning speed, but home builders are struggling. Homebuilders have raised their prices due to the high demand for construction supplies. In fact, the rise in the price of lumber, in particular, has almost single-handedly led to the price surge. However, it is compounded by a shortage of skilled labor, low inventory of buildable lots, and other cost pressures, according to the National Association of Home Builders

And there is still an overall inventory shortage. That shortage, combined with weakened affordability and higher prices, is the crux of the current rental market boom. Add to those factors the fact that there is still slow employment recovery and high unemployment levels, which places a preventative barrier on long-term, sustainable price growth. Taken together, these factors mean the rental market is seeing a surge. 

Specific Demands for Single-Family Homes

Not only are families and couples making a swift move toward single-family homes, but they also have specific demands. 

Shared Spaces and Pandemic-Informed Options

Getting out of high-density living is still a priority for many. The pandemic is on its way out, leaving everyone to do the work of recovery and revitalization, but it’s not quite a distant memory yet. Homes don’t just need a kitchen, beds/baths, and a common living room anymore. Instead, individuals and families need in-home space for a variety of activities that are traditionally outside the home. Plus, they still want the ability to socially distance when enjoying outdoor activities as well as city-type amenities within walking distance.  

In particular, single-family homes are in demand because of the opportunity for multipurpose spaces and the needs of individuals within the family unit. Adults, for example, are looking for rooms that can be used as offices, rather than setting up camp in shared spaces like living and dining rooms. Distraction-free space for schooling is in high demand as well, even if only for studying and hybrid classes. Parents don’t want virtual schooling to mean their children spend all day in their bedroom, a space that should be reserved for rest and play. 

Smart Homes and Tech-Forward Demands

In addition to the demand for individual spaces reserved for specific activities, the activities themselves have altered the need for in-home tech, both for convenience and lifestyle needs. More and more people are spending time on at-home hobbies and are working out at home. That means even small families are spreading out. This also leads to high demand for better bandwidth as streaming, gaming, classes, and work are all happening throughout the day. 

Beyond internet access, people are noticing other needs like home security as they spend unprecedented hours in their home space. They are looking for specifics like keyless entry, video monitoring of entryways, and other smart security measures. 

And as people naturally evaluate their home spaces, they notice other areas for improvement. Combined with the growing concerns about the environment, particularly among younger generations, the ability to monitor home appliances is in growing demand. Smart appliances and the ability to regulate things like light, water, and other features generate demand, not a preference, for smart homes. 

These concerns over home tech aren’t temporary. They are part of a natural evolution, partially informed by the pandemic and new at-home lifestyles and the increasingly tech-informed generations interested in saving money, home efficiency and environmental priorities. 

The Future of the Single-Family Rental Market

The single-family rental market is seeing a boom that’s looking more and more like sustained demand for the foreseeable future in 2021. We’re seeing weakened affordability combined with an increase in prices. An inventory shortage and slow employment recovery are also essential factors.

Additionally, renters are adjusting their demands to include more dedicated spaces for their evolving lifestyles, not just more space. And smart home technology is a fast-growing requirement that is here to stay. 

Staying ahead of these trends, investors are backing smart home designs that are built-in from the design and construction phases. They’re buying in suburb communities that have amenities and options for city dwellers. And they’re looking ahead to a strong rental market well into the coming years.  


CoreLogic – U.S. Home Price Insights

The New York Times – Anemic Jobs Report Reaffirm’s Pandemic’s Grip On Economy

National Association of Home Builders – NAHB Keeps Lumber Prices in the Headlines


Michelle is a veteran writer specializing in technology, finance, business leadership, and a broad range of other topics. When she isn't tapping at her keyboard, Michelle can be found hiking the Colorado Rockies with her dog, SCUBA diving anywhere there's salt and sand, or curled up with a good book and cat at her side.