Increasing Need and Cost for Residential Rental Dwellings
Over the past year — even amid a pandemic — the demand for rental dwellings in suburban U.S. communities grew considerably. Why? Because most people are spending more time at home and need more space.
According to the Wall Street Journal, buying a home was not possible for many, as the pandemic and a low supply of homes caused soaring listing prices, making homeownership unaffordable for average wage earners in 55% of U.S. counties (up from 43% last year). In response to the surge in demand, investors took action in 2020 by building the most single family homes since 2007, with the intention of renting to tenants.
These factors created a lucrative opportunity for landlords during a time of record occupancy and steadily rising rents. As homes continue to be built, tenants now have more options to rent newer homes than ever before; historically, landlords would seize the opportunity to turn low-cost, older homes into revenue-generating rental properties.
Consider additional examples of why rental properties are surging:
- Families are moving away from large cities and coastal communities
- Young professionals are working from home and are now able to rent and live farther from their office
- Large families need more space to work from home and watch young kids but might not be able to afford purchasing a dwelling with this much space
- Midwest cities are seeing a surge of a younger population not able to buy a home
Rental homes provide flexible options to meet the needs of tenants whose homes have now become offices and classrooms. Reports confirm that rising rent costs (2.5% year-over-year) have been significantly outpaced by the rise in median single-family home prices (7.9% year-over-year). This supports the idea that renting could be more attractive to families that do not have enough savings to purchase their own home (Inman).
As a result, these market forces naturally present an increased demand for tenant-occupied rental dwellings. USLI offers a variety of options to cover occupied dwellings, vacant dwellings under renovations and even ground-up construction projects. We provide replacement cost and special perils coverage for up to 10 locations for each account, which is extremely valuable for new builds across the U.S. We can write accounts in the name of an LLC, along with trusts and estates, and can also list the property manager as an additional insured.
To learn more about our product, please contact your Personal Lines underwriter today.
As always, thank you for your support and business.
Contact Dan Lewis
Underwriter | 888-523-5545, ext. 2626
Written by Cory Bennett
March 4, 2021