Serving the unique housing needs of today

In Q1, we continued to see steady demand for single-family rental homes, with above-96% average occupancy.

It’s a renter’s market, definitively.

For many, renting appears to be the better financial decision right now.

With higher interest rates and home prices, a recent study found that it is now more affordable to rent a home than to buy one in all 50 of America's largest cities (Bankrate).

And it's not just pricing dynamics that have shifted. Perceptions about housing are changing, too.

Claire Murray, who’s been a renter for almost a decade, recently told reporters: “I think renting can also be a good financial decision, and I don’t know if society’s always viewed it that way" (NBC).

Increasingly, there’s lifestyle considerations at play, too.

56% of residents who prefer to lease say it’s because they don’t want the maintenance responsibilities of ownership, according to a recent survey (John Burns Research and Consulting).

We asked the experts we trust the most — our residents — to share why they choose to rent, in their own words:

Like AMH residents Lauren and Johanns, whose goal is to own a home one day, homebuyers typically start out as renters.

The pivotal experience of leasing a home is a stepping stone to ownership for many households — and we continue to work to make it a positive one, offering professional support to simplify the more daunting aspects of single-family living, like maintenance. ??

For those who want to transition to ownership, the primary challenge is making the math work, especially in light of today’s affordability challenges.

Yet, the for-sale market is showing optimism: “first-time homebuyers continue to carry demand so far this year as they make up almost 6 out of 10 purchase applications” (Freddie Mac).

We remain focused on doing what we do best: building more homes for more people.?

Is that really going to solve the housing crisis?

Not singlehandedly, no. Professional single-family rental owners and developers like AMH maintain only a nominal share of the market, so our footprint is too small to impact national pricing dynamics.

But the core issue remains undersupply, meaning building more housing across all types is the most feasible solution.

In the 2010s, housing production plummeted by nearly 50%, contributing to a shortage currently estimated in the millions (more on that here).

Despite pronounced underbuilding, household formation among millennials continued to grow. And, as we all know, strong demand coupled with low supply means higher prices.

This applies to both owner-occupied and renter-occupied housing — an approximately 65%-35% distribution that has stayed largely the same since the 1960s.

While this is true for all housing types, it’s impacted home ownership affordability the most.

Because of critically low supply, trends in house prices have surged in the last four decades, whereas wages have failed to keep pace, further challenging affordability.

That means that providing our customers with options is especially important in this constrained housing market.

Today, AMH works to meet growing demand with new inventory.?

We’ve spent the past seven years building an integrated development capability so we can deliver quality stock in sought-after locations across the country.

This year, we once again expect to deliver between 2,200 and 2,400 homes.

All of them are also intentionally designed to meet modern consumer preferences.

AMH-built homes are built to be on average 54% more energy efficient than the typical American house, which supports resident comfort as well as the environment.

More on that, and other responsible business practices we champion, in our recently published 2023 Sustainability Report:

We work to serve the housing needs of today — and, in some ways, those have changed over time.

How did we get here?

Our origins date back to 2012, following the recession, which burst an inflated housing bubble.

But to understand the rental landscape at the time of the recession, we have to wind the clock further back.

When the economy was in high gear between 2003 and 2005, a significant number of rental units were converted into owner-occupied units and the share of rental stock declined, driving up rents (U.S. Department of Housing & Urban Development).

As the economy weakened between 2005 and 2007, production of new rental units fell, adding upward pressure on rents.

By the time the housing bubble burst in 2008, the rental market was undersupplied — and suddenly in great demand.

With the financial crisis, residential property values collapsed and the median income stagnated or declined.

As a result, many higher-income families that owned their homes switched to renting. Between 2007 and 2009, demand pushed rents further out of reach.

That’s where AMH comes in.

As foreclosures proceeded, homes and neighborhoods fell into disrepair, and underwater borrowers sold their assets, we began acquiring and rehabilitating vacated properties.

Over the years, we invested hundreds of thousands of dollars to improve the quality of this housing stock for the next generation of residents.

And we returned these renovated homes to market for lease, because that’s what the market needed at the time: more quality rentals that everyday people and their impacted families could afford.

But the world has changed since then.

Now, we’re serving the needs of today’s residents in today’s landscape. Those boil down to access to more housing, both new and existing, of all types and affordability bands.

That’s why we started our own homebuilding program in 2017 — and, more recently, ramped up the sale of our acquired homes on the MLS, including to individual home buyers.

Last quarter, we built roughly as many homes as we sold – 471 and 469, respectively.

Looking ahead, we’re gearing up for the standard seasonal curve, and our property management teams are capturing accelerated demand.

Ever wondered why spring is peak leasing season?

Monthly Google search volumes for movers and moving companies increase in spring and peak in June:

This is just the latest data point that reflects what the real estate industry has long known: the housing market blooms in spring.

The obvious reason is better weather conditions for moving.

That, and students and families with children often time their moves between school years for convenience.

The less obvious answers:

As we shed winter, new beginnings and fresh starts are on the collective mind.

Longer days means more time for home shopping and apartment hunting.

Fuller yards enhance curb appeal, and many rental homeowners wait until the weather tempers to do renovations and home improvement projects, both also incentivizing a flurry of housing activity.

All together, these factors result in an annual shuffle of inventory and occupants during spring and summer.

But given the national shortage of available homes, some liken it more to a game of musical chairs (The Builder's Daily):

“We played the game as kids. There are more people than chairs, and when the music stops, someone does not have a chair. It is the same in housing... By not increasing the number of housing units, we simply change who gets a new one.”

Which brings us back to the bottom line: we have to keep building.