“From the ashes of rapid and somewhat unpredictable change, a phoenix (pun definitely intended) has, time and again, risen: single-family rentals (SFRs),” Moody’s Analytics Senior Economist Ermengarde Jabir, wrote in a recently published analysis. 

Around the immediate aftermath of the Great Financial Crisis, there was a major shift, or the start of what has become a shift, in single-family rental ownership, Jabir told Fortune. What was almost exclusively mom-and-pop shifted as institutional investors entered the market, really because of how many single-family homes were foreclosed on. Institutional investors of course benefited, but they also essentially kept the market from hitting rock bottom. 

And now, despite the pullback we’re seeing in the multifamily rental market, in terms of rent growth, the single-family rental market is doing very well—exhibiting stabilization and marginal-positive growth, Jabir said. Housing is severely underbuilt across the country, and while that unfortunately has led to developing housing crises throughout the nation, it lifts the value of single-family homes. Consider millennials: The older of the generation were crushed in 2008, and the younger are being crushed now following record home price appreciation, which has proved to be beneficial for the single-family rental market because they’ve largely been priced out of homeownership. 

“All of these headwinds for the single-family purchase market are proving to be tremendous tailwinds for the single-family rental market,” Jabir said. Basically, home prices that rose over 40% nationally during the pandemic and mortgage rates that hit 8%, after being around 3% for some time, are pushing people to rent instead of buy. The reason that seems to be more beneficial for the single-family rental market than the multifamily has to do with the substitution effect. For some, they want to live in a house, and they want a house with a backyard or one that’s in a good school district because they have children. If it weren’t for a historic deterioration in affordability, they likely would be able to do so. “They want the traditional American dream, they might not be able to afford it, but they can afford it via renting a single-family rental,” Jabir said. Simply put, that’s good for investors. On the national level, single-family rental gross yields are higher than multifamily capitalization rates, according to Moody’s Analytics and Parcl Labs data. “What that’s telling us is there’s still tremendous value in the single-family rental market that’s yet to be captured by investors,” Jabir said. 

She continued, the single-family rental market is the “superstar of today and tomorrow,” because it’s here to stay, and it’s positioned for long-term growth—to the extent that builders are diverting resources away from building for the single-family purchase market to the single-family rental market. That’ll only tighten supply, which again, is beneficial for the single-family rental market. 

Not unlike most real estate sectors, there is variation among the performance of single-family rentals across markets. Amongst metropolitan regions with populations of a million or more, Rochester, N.Y., leads the pack of the top 10 single-family rental markets, as measured by gross yields per Moody’s Analytics and Parcl Labs. The gross yield for single-family rentals across Rochester is 11.7%, with a rent-to-list ratio of 0.19. Below, you’ll find the top 10 single-family rental markets by gross yield, and their respective rent-to-list ratios (the number of properties available for rent compared to the number of properties available for sale; when high, gross yields tend to be lower). 

Of these top 10 markets, there are only three with a large institutional presence. “It’s very interesting that where there is investment opportunity, in terms of high gross yields, there is almost no institutional presence,” Jabir said. Additionally, some of those markets aren’t necessarily areas where there’s been tremendous house price appreciation. But, there’s still a need for housing, where the population may not be poised to afford to buy, so that translates into higher rents. Still, it’s interesting that these metros that are generally considered affordable from the purchase perspective, are seeing elevated rents following outsized rent growths over the past few years that have since stabilized. Something else to note: These metros, aside from Houston, which is a bit of an outlier, have relatively low rent-to-list ratios, so where the number of properties available for rent is low compared to the number of properties available for sale, you’re better positioned. “These are definitely the areas to consider” as an investor wanting to enter the single-family rental market, or even expand their existing portfolio, Jabir said. 

“Right now, there’s still a lot of value to be had, especially in markets where institutional players haven’t made their mark yet,” Jabir said, later adding, “You can still buy single family rentals at prices that do yield attractive returns.”