American Homes 4 Rent

Housing

American Homes for Rent saw tremendous opportunity due to the wide affordability gap between renting and owning

The COO of American Homes 4 Rent told analysts that “affordability gap between renting and owning is that its greatest at least that I’ve seen,” “BRYAN SMITH, American Homes 4 Rent – COO: Thank you, Brian. This is Bryan. The affordability piece, it’s very interesting. If you take a look at our business, I think the affordability gap between renting and owning is that its greatest at least that I’ve seen, it’s about 17% cheaper or less expensive to rent right now in our markets than it is to buy. That being said, migration patterns, and we’re tracking those very carefully, as you know, paying very close attention to our applicants incomes”. (Q2 2022 American Homes 4 Rent Earnings Call, 8/5/2022)

The CEO of American Homes 4 Rent: “I think you’re going to see dislocation in this housing market as well, giving us tremendous opportunity.” “DAVID P. SINGELYN, American Homes 4 Rent – CEO & Trustee: Well, you can have people on the sidelines, but they also have to be able to afford the offering. And when you think about interest rates rising and you go with a home mortgage and you go from 3% to 5.5%, it’s a significant increase in the payment, reducing affordability. And this is not about demand. I mean, I’ll give you a comment on demand in a second. But it’s all about the pricing of the homes based on affordability to me. I — you mentioned 10 years ago the concept of recession, at least a housing recession back. And that’s when we built this company when we had tremendous opportunities. There is dislocation in the housing market. I think you’re going to see dislocation in this housing market as well, giving us tremendous opportunity. It will be driven by different factors.” (Q2 2022 American Homes 4 Rent Earnings Call, 8/5/2022)

CEO of American Homes 4 Rent: “Over 40 years, I do not know of a year in those 40 years where there has been a decline in rental rates on a national basis.” “DAVID P. SINGELYN, American Homes 4 Rent – CEO & Trustee: But when I look at demand, I guess it’s demand on two sides. Demand for rentals. Demand for rentals has always been strong. Over 40 years, I do not know of a year in those 40 years where there has been a decline in rental rates on a national basis, and occupancy has always been strong in the ’90s.” (Q2 2022 American Homes 4 Rent Earnings Call, 8/5/2022)

American Homes 4 Rent said their rents were increasing nearly 8% with no relief coming due to constrained supply 

The COO of American Homes 4 Rent noted that the incomes of their applicants rose 9% YoY while rents rose nearly 8%” “BRYAN SMITH, American Homes 4 Rent – COO: The best metric that I can give you for this year is through the first 6 months, our applicant incomes have risen about 9% year-over-year. And the rents that they’re applying for have risen a little bit less than 8%. So not only are we maintaining that really strong income to rent ratio, it’s actually improved a little bit. And I think part of that is due to the migration patterns, the strong out-migration from California and the Northeast. The other part of it is due to just really high demand for our product and an appreciation of the value proposition.” (Q2 2022 American Homes 4 Rent Earnings Call, 8/5/2022)

COO of American Homes 4 Rent: “the demand backdrop is fantastic. I don’t see any supply relief. I don’t see any new supply coming into the market that’s really going to eat into that. So I anticipate having pricing power through the balance of this year.” “BRYAN SMITH, American Homes 4 Rent – COO: Anthony, this is Bryan. That’s a great question. I can speak to the current demand environment and our expectations going forward. And as I talked about before, the demand backdrop is fantastic. I don’t see any supply relief. I don’t see any new supply coming into the market that’s really going to eat into that. So I anticipate having pricing power through the balance of this year. And my expectations operationally are to be able to enter next year in a position of strength, strong occupancy, good momentum to take advantage of the spring leasing season when it arrives. So everything’s really lined up nicely to have continued growth.” (Q2 2022 American Homes 4 Rent Earnings Call, 8/5/2022)