Investments in apartment buildings used exclusively for rental purposes—or “multi-family” properties—are a fairly widespread and well-known business. But in the U.S., we’ve been seeing a boom in single-family rental (SFR) properties—investments in single-family homes for rent—in recent months. The pandemic has led a growing number of Americans to seek out more spacious homes with yards or gardens on the outskirts of cities. At the same time, low interest rates and the extra income many families received from federal government relief funds have fueled a surge in demand for home purchases. Supply has not kept pace: according to the mortgage company Freddie Mac, the shortage of single-family homes in the U.S. currently stands at 3.8 million units. 

This has led to a sharp rise in housing prices, prompting a growing number of families to consider renting. And this is where the rental housing investment business began to boom. In recent months, investment banks and institutional investors—such as the Canada Mounted Police pension fund—have joined construction companies in this sector, including Lennar Corp. and DR Horton. 

A sign of the business climate was the acquisition of Front Yard—one of SFR’s leading companies in the U.S.—by the investment firms Pretium and Ares: after reaching an initial agreement in October 2020, they had to revise it in late November, raising the price per share from US$13.5 to US$16.25 in cash. This represented an increase in the premium over the share price from 36% in the October offer to 63% in the revised November agreement.