Lessors of Residential Buildings
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 54,000 lessors of residential buildings and dwellings in the US lease single-family homes, apartment buildings, and town homes. The industry includes owner-lessors and firms that rent real estate and subsequently sublet property to others.
Vulnerability to Trends in the Housing Market and Economy
The housing market is cyclical, and market conditions affect property income and values and the ability to collect rent.
Capital-Intensity of Operations
The residential owner-lessor business is extremely capital intensive.
Industry size & Structure
The average residential lessor operates out of a single location, employs about 6-7 workers, and generates $2.8 million in annual revenue.
- The residential lessor industry consists of about 54,000 firms that employ 370,000 workers and generate over $153 billion annually.
- The industry has a low level of concentration; the top 50 companies account for about 30% of industry revenue.
- Large firms with residential lessor operations include Essex Property Trust, AvalonBay Communities, Equity Residential, and Mid-America Apartment Communities. Some large firms are vertically integrated and operate as residential real estate developers.
- Despite the size of the industry, many large firms operate regionally.
Industry Forecast
Lessors of Residential Buildings Industry Growth
Recent Developments
Mar 19, 2025 - Nearly Three-Quarters of Households Priced Out of New Home Market
- A lack of affordability in the new, single-family home market could keep some would-be homebuyers in the rental market. In 2025, nearly 75% of US households are unable to afford a median-priced new home, according to the National Association of Home Builders. Given a median new home price of $459,826 and a 30-year mortgage rate of 6.5%, more than 100 million US households are priced out of the market. In 23 US states and Washington DC, more than 80% of households cannot afford a median-priced new home, suggesting a significant discrepancy between home prices and household incomes.
- January apartment sales increased for the first time in three years, according to data firm MSCI Real Assets and reporting by Multifamily Dive. In January 2025, apartment deal volume rose 9% to $8.1 billion compared to January 2024. However, the volume of apartment sales is still below pre-pandemic norms. January's average apartment sales volume was $12.8 billion between 2015 and 2019 – $4.7 billion more than January 2025. There are cues that the apartment market could thaw further in 2025. In late February, New York City-based Apollo Global Management bought Bridge Investment Group Holdings in an all-stock deal valued at $1.5 billion. Bridge’s assets include nearly 55,000 multifamily units. Multifamily Dive also noted that in recent earnings calls or other releases, several real estate investment trusts (REITs) mentioned adjusting their portfolios – either sales or acquisitions.
- High costs for financing reduced the development of single-family built-for-rent (SFBFR) construction activity in the fourth quarter of 2024 compared to a year earlier, according to National Association of Home Builders analysis of US Census Bureau data. In Q4 2024, there were about 15,000 SFBFR housing starts, down 38% from Q4 2023. However, during the four most recent quarters, 83,000 SFBFR homes began construction, which is up 8% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 8%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
- A surge in multifamily housing completions in 2023 and 2024 fueled by a building boom during the pandemic helped reduce rent growth, but lower rents aren’t likely to last much longer, according to The Wall Street Journal. A flood of new apartment inventory over the last two years, especially in the Sunbelt states, slowed rent growth – shelter costs in January 2025 were up 4.4% year-over-year, marking the slowest growth since January 2022, according to the US Bureau of Labor Statistics. However, as homeownership costs remain high, people are renting longer. Multifamily industry insiders expect the recent increase in apartment supply to be absorbed by the end of the year, which is likely to lead to more robust rent growth. By the end of 2025, every major metropolitan area in the US is projected to see positive rent growth, according to data firm CoStar.
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