He’s Still Just a Bill: A long ROAD (act) to Institutional SFR Bans

I can’t tell you how many calls I’ve had with clients in the past few weeks where the conversation eventually gets derailed by this guy:

Right now, investors everywhere are running endless iterations of the latest institutional SFR legislation through AI to figure out what it *might* say.

All that leads to is analysis paralysis.

The anxiety is understandable. Nobody has a crystal ball, and nobody knows what will end up in the final version after arbitration (if it even gets that far!). 

But while headlines are constantly changing, it pays to stay focused on more durable trends. Here are a few macro trends I’m seeing borrower teams get comfortable with that help them get over the hump and into underwriting today:

1. Population: The largest cohort of potential renters (people born in the 1990s and early 2000s) is now reaching peak household formation age, per John Burns. This generation’s tendency to date and marry later means more single individuals in need of high-quality rental housing, as homeownership costs remain high nationwide.

2. Constant Migration: The Southeast continues to attract residents from higher-cost markets across the country. Housing supply has expanded in Southeast and Southwest BTR markets, but domestic migration is notably strong in cities where the most BTR product has been built, signaling a continued demand for space, lower density, and amenities like garages.

3. Product Resilience: BTR and attached townhomes continue to be a more resilient product for developers and investors compared to traditional multifamily due to the shorter timeline to cashflow and a similar ability to centralize maintenance and leasing costs. They also produce higher renewal rates and average tenancy versus multifamily.

News cycles right now are dominated by stories about immigration policy, war, and supply shortages. Uncertainty about the economy and future legislation only add fuel to the fire. 

But smart real estate investors understand that getting in early and focusing on longer-tailed economic indicators like those above are more than enough to weather any temporary storm. 

Or, to quote Schoolhouse Rock… he’s “still just a bill.”