Bluerock believes the residential sector, including the single-family rental and apartment subsectors, are poised to continue their strong performance largely attributable to:

SFR-Sector-Webpage-01-Shortage-of-Housing

Shortage of housing and rental units

SFR-Sector-Webpage-02-Robust-Household-Formation

Robust household formation, leading to record high occupancy rates and rental rate growth

SFR-Sector-Webpage-03-Unaffordable-Homeownership

Unaffordable home prices

“The housing shortfall will continue to put upward pressure on single family home prices,
keep apartment vacancy rates low, and push rents upward”

JOHN CHANG, MARCUS & MILLICHAP

SFR-Sector-Webpage-01-Shortage-of-Housing

Shortage of Housing and Rental Units

A decade of undersupply has left housing inventories at an all-time low…

Trailing 12-Months Average National Existing For-Sale Home Inventory

Source: National Association of Realtors, July 2021

Existing home inventory ~50% below long-term average levels as of July 2021

SFR-Sector-Webpage-01-SFR-Rental-Demand

…which has substantially driven single-family rental demand to nearly 17 million units.

Source: JCHS tabulations of BLS, Consumer Price Indexes, 2021

The high demand has pushed single-family rental and apartment occupancy
and rent growth to record levels

SFR and Apartment YOY Asking Rent Growth

Source: Green Street Residential Sector Update, March 2022

The 2021 surge in single-family rentals coincide with a historic rise in home property values. According to the S&P/Case-Shiller Home U.S. National Home Price Index, annual home price appreciation for 2021 was greater than 17%.

Source: St. Louis FRED, December 2021

SFR-Sector-Webpage-01-Surge-in-SF-Rentals
SFR-Sector-Webpage-02-Robust-Household-Formation

Robust Household Formation, Leading to
Record High Occupancy Rates and Rental Rate Growth

The current housing shortage is viewed as a constraint on future growth,
while household formation is constrained by housing availability…

The severity of the housing shortfall has advanced to a point where it is constraining household formations, an impediment to economic growth.

Source: Marcus & Millichap, Multifamily National Investment Forecast, 2022

SFR-Sector-Webpage-02-Housing-Shortfall
SFR-Sector-Webpage-03-Unaffordable-Homeownership

Unaffordable Home Prices

Renting continues to be the more affordable option when comparing
monthly rent payments to home payments

MONTHLY HOMEOWNERSHIP COST VS MONTHLY RENT COST
SFR-Sector-Webpage-03-Homeownership-Cost-2000
$700+

2000

SFR-Sector-Webpage-03-Homeownership-Cost-2006
-$6

2012

SFR-Sector-Webpage-03-Homeownership-Cost-2021
$300+

JUNE 2021

Source: Marcus & Millichap, The Five Things Every Multifamily Investor Needs To Consider This Year, June 2021

This unaffordability has created an imbalance of apartment supply and demand,
with demand outpacing supply by more than 600,000 units

Cumulative Supply and Demand Since 2010

Source: Axiometrics, Q4 2021

The shortage of more than 600,000 apartment units has pushed occupancy rates to an all-time high of nearly 98% and annual rental rate growth of more than 14% in 2021.

SFR-Sector-Webpage-03-Apartment-Shortage

U.S. Apartment Occupancy Rate

Share of total rental stock that is occupied

Source: Axiometrics, Q4 2021

The housing shortage and unaffordable home prices, coupled with strong household formation, have driven apartment and single-family occupancy rates to unprecedented highs, in turn driving rental rate growth to record levels, making a strong case for an investment in rental housing.