The U.S. residential market has undergone a major change in the past decade. Since the Great Recession, rental demand expanded by about 6 million units, not accounting for demolitions. In contrast, only 2.5 million units of new supply were added over this period. Despite the additional supply through own-to-rent conversions of existing housing, rental vacancies still dropped to historically low levels while rents grew at rates well above consumer price inflation and household incomes.

The collapse of home prices during the housing bust was followed by a strong recovery. Nationally, home prices grew notably faster than rents in the past five years, making ownership less affordable. In many major cities, renter households earning a median income are unable to qualify to purchase a home, often spending a high share of income on rent. Middle-income renters are one of the groups most affected by rising housing costs.

This situation presents a major opportunity for investors