In this month’s LinkedIn newsletter, which you can subscribe to at the bottom of this post, we reported year-end results reflecting the resilience of our business strategy in a landscape of economic uncertainty and housing scarcity. Throughout 2022 and Q4, we’ve continued to consistently provide a high-quality housing option, market-leading resident experience, and reliable growth through our built-for-rent program, which contribute solutions to America’s ongoing housing shortage.

 

It’s undeniable that the U.S. is experiencing a housing affordability crisis. Commentary on the complex reasons behind it abounds. Many experts and media outlets point to a national shortage as the crux of the ongoing problem: 

 

• In The Atlantic, Annie Lowry concludes in The U.S. Needs More Housing Than Almost Anyone Can Imagine that “for Americans to live a productive, prosperous, happy life, homes need to be truly abundant.” In Meet the Latest Housing-Crisis Scapegoat, Jerusalem Demsas further explains that: “Housing is primarily unaffordable in this country because of persistent undersupply. A lack of supply is caused by a complex web of rules and regulations that prevent developers—profit and nonprofit alike—from building enough housing to meet demand. For decades the United States has been underbuilding in employment hubs… pushing prices up.”

 

• In The housing shortage is the root of all of America's problems, Jacob Zinkula of Business Insider stipulates that: “The housing market's crash during the Great Recession led the industry to pull back on construction for many years, and materials and labor shortages during the height of the pandemic fueled another slowdown. Some have pointed to complex rules and regulations — many of them related to environmental concerns — that have made it more difficult to build homes.”

 

•  Analysts Sam Bowman, Ben Southwood, and John Myers even coined a term for the insidious ramifications of this shortage, which they call the housing theory of everything: “Western housing shortages do not just prevent many from ever affording their own home. They also drive inequality, climate change, low productivity growth, obesity, and even falling fertility rates.”

 

All recent estimates number the existing deficit in the millions, whether that’s closer to two or six varying by source and optimism. Regardless, the gap doesn’t appear to be closing any time soon. Downward trends in current homebuilding activity, like permits and starts, project a continued decline in new housing inventory. Exacerbating this shortage are growing demand for housing, enduring supply chain challenges, and elevated mortgage rates and construction costs:

 

“Housing construction weakened in January as ongoing affordability conditions fueled by high mortgage rates and building material costs challenged the market,” said Alicia Huey, chairman of the National Association of Home Builders. “And while a recent two-month upturn in builder sentiment indicates a turning point for single-family construction could take hold in the months ahead, policymakers need to fix the supply chain for building materials to ensure builders can add the additional inventory the housing market desperately needs.”

 

It's no wonder that, in this landscape of economic whiplash and housing scarcity, many Americans are turning to—or continuing to bet on—rental homes, which remain the more affordable option across most metropolitan regions.  

 

So how did AMH contribute solutions to this housing crisis in 2022?

 

Last year, in this backdrop of broad uncertainty, we committed to proving our resilience and dependability more than ever, to care for and earn the trust of the residents, employees, communities, and shareholders who rely on us.

 

And our year-end results reflect that.

 

As both a leading single-family rental operator and top national homebuilder, we continued to deliver on our promise of providing: new stock to an undersupplied market, a high-quality housing option, and market-leading customer service.

 

Specifically, in 2022, we closed out the year with:

 

2,183 newly built homes added to the market through our Development program, which remains the backbone of our growth.

 

Currently, our traditional and national builder channels are largely on pause, as it remains difficult to acquire properties in a responsible manner in these market conditions. But, unlike many of our industry peers in similar positions, we don’t rely solely on open market acquisitions to grow.

 

Our unique built-for-rent program produces stable and predictable growth, and delivered according to plan in 2022. During the fourth quarter alone, we delivered 701 total homes, exceeding our target expectations, and adding much-needed supply to the national housing stock.

 

Of these, 415 homes were delivered to our wholly owned portfolio, which now totals approximately 60,000 properties and over 100 communities across more than 20 states, home to roughly 200,000 residents who opt to rent.

 

Looking ahead, we forecast another year of consistent growth in new construction. Despite the constrained acquisition environment, we still expect to deliver an additional 2,200 to 2,400 homes in 2023, maintaining consistency in our ongoing contributions.

 

We’re also seeing encouraging signs of reduced labor and input costs in many of our markets already, which should translate into savings. For example, lumber is now one-third of the cost of its peak pricing in May of 2021. We expect to see further reductions this year, which would show yields in our vertical development in late 2023 or early 2024.

 

On the disposition front, we anticipate another active year of selling houses that do not align with our long-term objectives, and focusing on optimizing our existing asset base. Overall, in 2022, we sold nearly $300 million dollars worth of houses, the vast majority of these to individual property owners.

 

97% same-home average occupied days, reflecting our focus on the resident experience.

 

Driven by our relentless focus on the resident experience, our team delivered on key initiatives in 2022 that set the stage for continued improvements in 2023, and are already translating into greater customer satisfaction. In January alone, we received a record-high 4.7 Google rating.

 

• Last month, in conjunction with our rebrand, we launched an upgraded website with a focus on the mobile experience and making leasing more convenient than ever before. New features include simplified home searches, streamlined map functions, and an even easier touring process.

 

• We also made progress on our next-generation maintenance services platform, which includes system enhancements to our logistics, scheduling, and communications functions.

 

• Most importantly, these technology advancements allow us to better listen and respond to our customers’ needs and wants, by capturing data and analytics through which we can continue to enhance our offerings.

 

This year, strong demand for our homes has continued into January and February. We’re seeing increased website traffic and inbound leasing inquiries, driving a 20% uptick in distinct showings per rent-ready property compared to long-term averages.

 

And same-home average occupied days has remained at 97.0% to date, suggesting residents are staying put as inflation continues to pressure consumers and businesses alike. Despite a cooling economy and widespread news of mass Big Tech layoffs, the majority of our households consist of dual income earners that are employed in resilient sectors, such as healthcare, emergency services, and government, and less vulnerable to this displacement.

 

Looking ahead, we’re expanding our platform’s capabilities to continue benefitting resident satisfaction and retention, and elevating the quality of the overall resident experience across the user journey, which remains at the heart of our brand purpose and business strategy.

 

That’s why, in 2023, we’re formally naming this core focus the Resident 360 program, which will see investments in the form of: added resources to our property management platform, continued system innovation, and bolstering of various supporting functions, all in the service of our customers, current and future.

 

As we continue to solidify our market leadership in customer service and maintenance delivery this year, we also remain committed to once again proving the resilience of our business model and value proposition.

 

Pillared by a diversified portfolio footprint, healthy balance sheet, customer-centric operating platform, and robust built-for-rent growth channel, we’re positioned for long-term value creation—and we look forward to serving our residents, employees, neighbors, and shareholders into 2023 and beyond.

 

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This letter contains “forward-looking statements.” These forward-looking statements relate to beliefs, expectations or intentions and similar statements concerning matters that are not of historical fact and are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” expect,” “anticipate,” “intend,” “potential,” “plan,” “goal,” “outlook,” “guidance” or other words that convey the uncertainty of future events or outcomes. Examples of forward-looking statements contained in this letter include, among others, our belief about our future operating results, our expectations for new home deliveries in 2023, our expectations for our technology investments, and our belief that our homebuilding program will result in continued growth. The Company has based these forward-looking statements on its current expectations and assumptions about future events. While the Company’s management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control and could cause actual results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this letter. The Company undertakes no obligation to update any forward-looking statements to conform to actual results or changes in its expectations, unless required by applicable law. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of the Company in general, see the “Risk Factors” disclosed in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2021, and in the Company’s subsequent filings with the SEC.