Terner Center Blog: No Limits

Renting the Dream: The Rise of Single-Family Rentals

Posted on by Carolina Reid, Carol Galante, Rocio Sanchez-Moyano

Tenants living in single-family homes in the United States represent the fastest growing segment in the housing market today, but neither academic literature nor public policy has kept pace with their growing importance. Today, the Terner Center is releasing a new study seeking to better understand this group of renters, the homes and neighborhoods they occupy, and the policies that might better support their success.

Our study presents data on single-family renters living in a range of housing markets across the country. Our first question: why has this market segment grown so fast? In short: a boom in single-family home construction in the early 2000s followed by the recession and foreclosure crisis positioned many families with a need to rent, and many formerly-owned homes with a need for occupants.

But there’s more than just market dynamics at play here. Our research also found that personal circumstances and preferences are driving some of this increase as well: single-family rental homes also serve as a good option for families seeking the amenities of a detached home in a suburban neighborhood, but without the commitment or barriers associated with ownership.

Indeed, many of the single-family renters we surveyed perceive advantages to their current home, citing relative affordability, convenience, flexibility and access to quality neighborhoods.

We also learned that four in five single-family renters hope to become a homeowner within the next five years (and most seek to own a home different from their current residence).  Yet it is unclear whether they will be able to make that dream a reality. Though many single-family renters aspire to homeownership, the pathway is just as rife with barriers—from credit challenges to insufficient resources for a downpayment—for single-family renters as it is for large swaths of the rest of the population.

In better understanding their needs and preferences, and recognizing the reality that they will likely remain a significant market segment, our paper puts forth several recommendations to develop and implement policies to protect and support the single-family rental population. As supply constraints and broader market forces continue to put pressure on affordability (among renters and homeowners alike) some strategies like a renter’s tax credit and lease-to-own models could provide short and long-term financial assistance to single-family renters. Meanwhile, strategies to support fair and quality property management—specific to this type of housing typology and renter—will also be increasingly important.

Though this research draws from a relatively small data set, it puts a spotlight on this emergent and under-examined part of the U.S. housing market, and points practitioners and academics alike in the direction of much needed further discussion and analysis.


It All Adds Up: The Cost of Housing Development Fees in Seven California Cities

Posted on by Sarah Mawhorter and David Garcia

In the summer of 2017, the Terner Center embarked on a seemingly straightforward task: determine the amount and type of fees levied on new residential development in seven California cities. What was initially thought to be a clear assignment turned into an odyssey of combing through difficult-to-obtain fee schedules, cobbling together piecemeal information across city departments, and repeatedly interviewing various city planning officials. The onerous and lengthy process our research team faced tells the story of the development fee process in California. While fees act as an important tool to mitigate the effects of new construction, the development and administration…


Perspectives: Practitioners Weigh in on Rising Housing Construction Costs in San Francisco

Posted on by Carolina Reid and Hayley Raetz

It is no secret that producing new housing in California is an expensive endeavor. Our Cost of Building Housing Research Series recently launched with the goal of understanding why this is the case, breaking down the elements of the housing development process to identify key cost drivers and potential private and public sector solutions. Today we are releasing our first brief of the series, which examines rising housing construction costs in San Francisco from the perspective of non-profit and market-rate housing developers, architects, and other practitioners on the ground. The brief shares findings from a series of interviews and focus…


Announcing New Terner Center Series: The Cost of Building Housing

Posted on by Terner Center for Housing Innovation

In recent years, the housing affordability challenges faced by high-cost regions have gone from bad to worse. A number of factors, including shrinking public subsidy, explosive job growth, wage stagnation, and a severely constrained supply of housing have all been widely cited as drivers (with each region facing a unique set of circumstances). Another factor that is compounding the housing affordability issue is the actual amount of money it takes to build a housing unit. In recent years, the cost of building has skyrocketed in places like San Francisco - in some cases increasing by up to 50 percent -…


ADU Update: Early Lessons and Impacts of California’s State and Local Policy Changes

Posted on by David Garcia

A multi-pronged approach to alleviating the shortage of housing in California and other high-cost regions is urgently needed. As we have discussed in past research, Accessory Dwelling Units (ADUs) - built with a small footprint predominantly in under-utilized single family neighborhoods - can offer much needed naturally-affordable supply to the market. In the fall of 2016, the California State Legislature passed a set of bills intended to clear the way for the proliferation of ADUs  in California. Even before these changes were adopted, many leaders at the local level were pioneering policies to make it easier for residents to build…


New State Policies Aim to Boost Access to Opportunity through Housing

Posted on by Elizabeth Kneebone and Carolina Reid

In California, the Tax Credit Allocation Committee (TCAC) plays an important role in determining where and how Low Income Housing Tax Credits (LIHTC) get allocated for the production of affordable housing. On Wednesday, TCAC adopted a series of policy changes aimed at increasing the development of affordable housing options for families in higher opportunity communities, signaling a commitment to advancing fair housing goals amid the state’s broader agenda to address California’s housing crisis. The regulations seek to respond to a growing body of evidence that communities that provide low-income families access to good schools and safer, lower-poverty, and less segregated…


A Reform Proposal for the Federal Housing Administration

Posted on by Carol Galante

Media reports and other sources in Washington, D.C. suggest momentum is building for housing finance reform. According to a recent piece in National Mortgage News, “the White House and congressional GOP are eyeing a tight window between tax reform and the 2018 midterms to pass housing finance reform. And with key policymakers readying their exit, the effort could be the most concerted push yet.” As policymakers debate the future of the nation’s housing finance system, I urge them not to overlook both the importance of the Federal Housing Administration and the improvements it needs in order to fulfill its mission and…


Scaling Off-Site Production in the United States: Lessons Learned from Swedish Leader Lindbäcks

Posted on by Mark Trainer and Carol Galante

When it comes to innovation in housing, what does the U.S. have to learn from Sweden? More than you might think. Though they have different histories, economies and social contexts, Sweden and the United States share many housing market challenges – including significant barriers to new construction and high cost of production leading to rapidly appreciating housing prices, especially in urban centers. The Terner Center recently published a policy brief providing a detailed examination of the Swedish housing system, and a companion summary outlining key similarities and differences with the United States. And last month, the Terner Center for Housing…


Lessons for the Future of Public Housing: Assessing the Early Implementation of RAD

Posted on by Carolina Reid

In its 2018 budget, the Trump Administration is proposing to slash public housing funding by $1.8 billion. This cut represents a 29 percent decline from 2017, and will compound a longstanding trend of underinvestment in public housing and worsen an already dire situation. Over time, these shortfalls in federal funding have resulted in a $26 billion backlog in needed repairs, leaving many residents in public housing units across the country with untenable living conditions and a precarious housing future. In addition, every year we lose valuable units of public housing to demolition because of this lack of investment: HUD reports…


Paying For Dirt: Where Have Home Values Detached From Construction Costs?

Posted on by Terner Center

Home prices reflect the value of the land and the value of the structures and other improvements on that land. In high-cost metro areas of the United States, the exorbitant cost of a house may not seem to be justified by its appearance, suggesting that homebuyers are paying a premium for their location. In a recent blog post “Paying For Dirt: Where Have Home Values Detached From Construction Costs?,” Issi Romem, Chief Economist at BuildZoom investigates the disparity between the appearance and price tag of homes, identifying the places in which home buyers pay mostly for the location. The main…