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Introduction
The single-family housing rental market is a unique one that vividly illustrates the local character of real estate. All participants in the real estate industry can quote the old saying about the three most important things in real estate: "location, location, location," which is important because real estate is local. This key economic or market variable is fundamental to real estate since real estate is immobile. Therefore, real estate markets are unique and separated from each other. No aspect of real estate better illustrates the local nature and uniqueness of real estate markets than the single-family housing rental sector. This article presents the results of an examination of how the distinctiveness of real estate markets is revealed by singlefamily housing rental statistics in a number of American cities. The article also reveals that unique opportunities exist because of the inefficiencies in single-family housing markets.
Differences in rental rates between various real estate markets illustrate how real estate markets are localized. Analysis of any real property necessitates local data. Many urban areas have accurate sources for data on multi-family housing, including rental rates and vacancy rates. Unfortunately, data on single-family rentals are scarce. Like much other information on real estate, rental rates on single-family houses are not available in published studies, but are available through time-consuming collection efforts. For example, a city without a published study on retail vacancy rates could obtain an accurate finding by visually examining all retail space and recording the vacant square footage. The information is out there, but the effort to collect it would be costly and labor-intensive. Many aspects of real estate markets are not known to the public because they are not published, but those individuals who put forth the effort to collect the information have an advantage in the marketplace. The market is inefficient because the people with the limited information can design a profitable trading strategy. Real estate markets are full of uninformed participants.
The single-family housing rental market exemplifies this data availability problem. The single-family market is unique and not like the apartment market. Few large real estate firms participate in the single-family housing market and, therefore, few efforts have been made to study them. Many single-family rentals are managed by owners/investors; developers rarely build...