08/04/2026
Where are all the single-family rental homes going?
This is something I have been thinking about as both a mortgage lender and a real estate investor.
In April 2022, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to substantially increase the upfront fees charged on second-home mortgages. Depending on the down payment, the increase ranged from 1.125% to 3.875%.
Second homes, which had previously received pricing closer to primary residences, suddenly became much more expensive to finance—bringing their economics closer to investment properties, which already carried significant pricing adjustments.
Then mortgage rates increased. Home prices remained high. Insurance, property taxes, repairs, labor, and materials all became more expensive.
In many markets—particularly expensive markets like Southern California—the numbers on a traditional single-family rental simply stopped making sense.
A small investor looking at a house, condominium, or townhome often cannot charge enough rent to cover the mortgage, taxes, insurance, maintenance, vacancy, and the risks that come with being a landlord.
At the same time, some existing mom-and-pop landlords are selling.
Their properties have appreciated significantly. Their operating costs have increased. In California, the legal and regulatory environment has also caused some owners to reconsider whether they want to remain landlords.
When those rental properties are sold, many are purchased by owner-occupants. That may help an individual family become a homeowner, which is a positive outcome—but it also removes another detached home from the rental inventory.
There is one source of new rental inventory: homeowners who purchased or refinanced at historically low rates and decide to keep their former home when they move.
But even that is becoming harder. With today’s home prices, many people need the equity from their current property to purchase the next one.
The result?
We are building apartments, but in many communities, we are not replacing the single-family rental homes that are disappearing.
That matters because not every family is ready or able to purchase. Some renters need a yard, additional bedrooms, space for children, pets, multigenerational living, or simply a home in a particular school district.
In some markets, qualifying to rent that kind of home can now feel almost as difficult as qualifying to buy one.
This raises a larger policy question:
Do we want rental housing increasingly concentrated in apartments and large corporate portfolios—or do we want an environment where local, mom-and-pop investors can still provide homes for families who need or prefer to rent?
Small landlords are frequently treated as part of the housing problem. I think we should also consider the role they play in providing a type of housing that our communities may not be replacing.
I’m interested in what others are seeing. Are single-family rentals becoming harder to find in your market?
Wes Hankins
President, Vault Financial
Mortgage lender and real estate investor
NMLS #235452
vfmortgage.com
