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Where Are The Single-Family Rentals? Why Are Landlords Selling?

By DON FENLEY

GRAY, Tenn. – During a time when demand for single-family rentals has outstripped supply, it seems counterintuitive that owners would dump their rentals. But according to courthouse records, that’s what’s happening.

Although some think single-family rentals are dominated by out-of-state investors, data show that most are locals. In fact, many of the landlords are traditional mom-and-pop operations locals have used to capitalize on tax breaks, embrace the wealth generation properties of real estate and to add an extra revenue stream to the family budget. But there are individuals with multiple properties who are keeping rentals as investments.

So why have landlords dumped almost 26,000 single-family homes and townhomes since the pandemic?

The simple answer is 2020, 2021 and 2022 were the strongest seller market years the region has seen in decades. Some owners looked at the market, the cost and headaches of being a landlord and decided it was a good time to get out to cash out.

The whys and how’s of real estate investing are not what most local residents and real estate professionals want to know about. They’re top concern is where are the rentals and what’s available. It’s a dynamic universe where rentals come off and go on the market every day. But here’s a capsule look at where most rentals were located at the end of the second quarter.

Bristol – 9,246

Johnson City – 7,683

Kingsport – 6,665

Greeneville – 5,967

Abingdon – 4,470

The region’s overall vacancy rate is 2.6%. That’s 1% lower than the regional apartment vacancy rate.

Zip codes with the largest number of vacancies were:

37620 – Bristol – 190

37660 – Kingsport – 185

37745 – Greeneville – 161

24201 – Bristol – 138

24210 – Abingdon – 129

37601 – Johnson City – 100

The zip code with the highest vacancy rate was:

37665 – 11.16% with 75 vacancies.

Fifteen of the 42 zip codes in the Q2 ATTOM analysis had no vacancies. Included in the zips with no vacancies and more than 1,000 rentals were 37615 in Johnson City, 24211 in Abingdon, 24251 in Gate City, 37641 in Chuckey.

Eleven zip codes had vacancy rates of less than 1%.

While the NE TN SW VA single-family rental market still strongly favors landlords, there are some signs demand is beginning to wane. It hasn’t show up in occupancy – like it has in the apartment community when landlords are beginning to offer incentives – but some of the recent build-to-rent developments have not performed to expectations.



Categories: REAL ESTATE