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It\u2019s no secret that we\u2019re in the midst of an affordability crisis within the housing world. Things haven\u2019t been the same since the start of the pandemic; home prices<\/a> are high and mortgage rates<\/a> are high, too. For some, the thought of ever owning a home is becoming more distant, if not non-existent.\u00a0<\/p>\n So what do people do if they can\u2019t buy a home? They rent one.\u00a0<\/p>\n \u201cWhen you think about the affordability crisis really playing out in the U.S. today, it is benefiting the rental market,\u201d Morgan Stanley\u2019s head of global listed real assets, Laurel Durkay, said in an interview<\/a> with CNBC last week. She continued, referring to an earlier comment made by the anchor: \u201cSo you had said that it was moving from the American dream to a pipe dream, that does provide opportunity for rental landlords to be able to fill this affordability gap.\u201d<\/p>\n Institutional investors entered the single-family rental space in the aftermath of the Great Financial Crisis because of how many homes were foreclosed upon; they bought them in bulk for cheap. And while it kept the housing market from hitting rock bottom, they benefited immensely. Years later, they\u2019re still benefiting\u2014only now, it\u2019s because housing has become so unaffordable.\u00a0<\/p>\n In the latter half of last year, Moody\u2019s Analytics Senior Economist Ermengarde Jabir told<\/a> Fortune<\/em>, the single-family rental market is the \u201csuperstar of today and tomorrow,\u201d for investors, that is.\u00a0<\/p>\n Jabir explained it perfectly at the time: People want to live in a house, they want a backyard, they want to be near a good school district for their kids\u2014and if it weren\u2019t for the unprecedented and rapid deterioration in affordability, they might have been able to have just that. \u201cThey want the traditional American dream, they might not be able to afford it, but they can afford it via renting a single-family rental,\u201d Jabir said.<\/p>\n And that doesn\u2019t seem to have changed.\u00a0<\/p>\n \u201cI think the most attractive right now, taking everything into consideration, is going to be the single-family rental market,\u201d Durkay said, in terms of investment. She added that some pockets of multi-family homes would be considered a good investment, too\u2014but because of a recent boom in multifamily construction, particularly in the Sunbelt, rents have generally flatlined, or in some instances, fallen. Rents are still considerably higher than pre-pandemic levels, but according to <\/a>Capital Economics, renting will be cheaper than buying for years, especially with home prices <\/a>hitting all-time highs almost every month.\u00a0<\/p>\n When it comes to landlords, they\u2019re more so referring to institutional landlords (also called institutional operators or institutional investors; take your pick). Durkay mentioned Las Vegas REIT American Homes 4 Rent<\/a>, which she said runs about 60,000 homes and is a developer of single-family homes, as well. \u201cThey were one of really the first institutional players out there to develop single-family homes exclusively for rent, and that is providing them with a multi-year runway of future growth that they\u2019re going to be able to benefit from, and also really kind of helping this affordability crisis,\u201d she said. \u201cWhen you think about renting an AMH home, it\u2019s actually 25% more expensive to own a home in the AMH markets.\u201d<\/p>\n She didn\u2019t delve into that further, but as Fortune<\/em> has previously reported<\/a>, most estimates put institutional ownership at less than 5% of single-family rentals and less than 1% of all single-family homes. However, that isn\u2019t the whole story. For one, in Atlanta, a so-called desirable market, Wall Street owns more than 4% of all single-family homes. It could be a significant factor in rising housing costs.\u00a0<\/p>\n Later, Durkay mentioned AvalonBay, a multifamily real estate investment trust and one of the largest apartment owners in the U.S. She said: \u201cIn AvalonBay markets, the average home price is over $800,000, so the affordability of those markets is significantly lower than what you would see nationwide\u2026it\u2019s about 95% more expensive to own a home in their markets than it is to rent.\u201d\u00a0<\/p>\n Here\u2019s the thing, this is all great for investors and homebuilders. And while some would suggest it\u2019s great for Americans, too, because they can rent and live in the homes they want, they\u2019re still renting because they can\u2019t afford to buy. Owning your own home is a core tenet of the American Dream, and in the present environment, it isn\u2019t so cut and dry.<\/p>\n<\/div>\n\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n