On June 28, the Federal Housing Finance Agency (FHFA) hosted more than 60 housing industry professionals – ranging from advocacy groups and investors, lenders and non-profits, to service providers and researchers – for a day-long discussion to better understand the single-family rental market and gather feedback as part of our ongoing stakeholder outreach. Industry experts provided background and discussed where the single-family rental market is today. FHFA staff facilitated small-group, roundtable discussions on several topics, including the broader implications of Fannie Mae and Freddie Mac's (the Enterprises) participation in the single-family rental market and potential impacts to communities and homeownership.
Our Single-Family Rental Workshop represented the starting point for conversations on how, or if, the Enterprises should serve the investor-owned segment of the single-family rental market. The workshop will be complemented by our continued outreach, and will help FHFA determine what role, if any, the Enterprises should play beyond their traditional single-family footprint. Today, the Enterprises, through their single-family businesses, limit the number of properties to a single borrower to not more than ten at Fannie Mae or six at Freddie Mac.
There is industry consensus that single-family rental units are a growing segment of the rental market and can provide affordable housing alternatives to families in need of more space than a traditional apartment. A report published by the Joint Center for Housing Studies of Harvard University in 2016 indicates that single-family rentals reached record levels in mid-2015, representing roughly 37 percent of the total rental stock.
FHFA has authorized both Enterprises to explore single-family rental transactions on a limited basis. These transactions, which must be approved in advance by FHFA, will help the Enterprises test and learn about the market and will allow FHFA to study how the Enterprises could serve families who choose to live in single-family rental properties. Lessons learned from these transactions, ongoing research, and continued outreach will serve to shape FHFA's thinking going forward.
FHFA recognizes that single-family rental transactions will raise larger policy issues, such as the role of the Enterprises as liquidity providers in the housing finance system and their role in supporting affordable housing. Some questions we are considering include:
- What role should the Enterprises play in supporting investor owned single-family rentals beyond their traditional 10- and 6-unit limit?
- Should the Enterprises serve specific single-family rental markets segments and not others?
- What tenant protections should exist for single-family rentals? How would they be different from protections for traditional multifamily housing?
- What are the broader implications of growth in the single-family rental market, including impacts on communities and homeownership opportunities?
- Should the way FHFA calculates the multifamily production caps change if the Enterprises take on a larger role in financing the single-family rental market?
- Are the shifts in homeownership rates since the housing crisis temporary or the result of more permanent structural changes in housing industry?
We look forward to more discussion and encourage stakeholders to continue to share their insights.
By: Maria Fernandez
Senior Associate Director, Office of Housing and Regulatory Policy