Build-to-rent: Everything you need to know about the booming homebuilding trend that’s here to stay
Homeownership is the American Dream, with single-family homes representing upwards of 65% of total housing supply. Yet, for nearly a century, the single-family home has remained unchanged.
The last significant design upgrade was incorporating the invention of the attached garage, which became a staple as a result of Ford’s affordable car revolution. Since then, home design has adapted in minor ways to mirror current trends and usage needs. For example, flat screen TVs have freed up square footage and the kitchen-dining-living area triangle opened space for larger families and entertainment.
BTR is an attainable way to experience the American Dream for millions
What started in Arizona in the early 2010s has now turned into a coast-to-coast phenomenon driven by rising mortgage interest rates, economic uncertainty, the shrinking availability of big single-family lot sizes in desirable areas and, of course, the needs of the next generation of homeowners.
Millennials are finally growing up. They’re moving in together, adopting pets, getting married and having children. But they’re also buying fewer material goods and becoming more environmentally conscious. Owning things is less important to millennials — you can see it in the undeniable rise of the sharing economy — and in many cases around the country, renting often makes more financial sense than owning.
BTR communities give millennials, and millions of other Americans from a range of generations, a shot at the American Dream without the mortgage payment.
Single-family BTR communities are leasing fast and proving to be profitable
In Phoenix, for example, residential BTR communities in suburban areas experience lease rates up to five times faster than Class A multi-family apartment projects in the urban core of the city.
Last year, more than 6,700 new build-to-rent homes were constructed, according to YardiMatrix data. In 2022, developers are expected to bring more than 14,000 units to market for lease-up.
The single-family rental space has been a highly invested market segment. Previously, owner-occupied units were bought up in pockets all over the country, which understandably strained property managers and other general operations. With BTR communities, management becomes more efficient, operating expenses can be synergized and upkeep can become more streamlined and less expensive.
How we idealize housing in America at scale is changing — you can have the four walls, but they don’t need to be your “forever walls” and you no longer have to own them.