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11/25/2024

The Rental Market Revolution: Build-to-Rent Communities and Their Growing Popularity

By Grace Harper

The Build-to-Rent Revolution

The rental housing market is undergoing a significant transformation with the rise of build-to-rent (BTR) communities. These purpose-built rental neighborhoods are reshaping the landscape of residential real estate and attracting attention from both investors and renters alike.

A built-to-rent subdivision with active construction.

According to the 2024 Build-to-Rent Homes Report by Fixr.com, the build-to-rent (BTR) industry has been the fastest-growing segment of single-family home construction in recent years. In 2023, an estimated 112,920 BTR home starts occurred nationwide—a 102% increase since 2019. This growth is driven by rising home prices, high mortgage rates, and a limited supply of traditional homes, making BTR communities an attractive alternative for many renters.

What's driving this build-to-rent boom?

  1. Changing demographics: Millennials and Gen Z are delaying homeownership, often preferring the flexibility of renting.

  2. Rising home prices: As traditional homeownership becomes less affordable, BTR communities offer an attractive alternative.

    A chart showing the median sales price of houses sold for the United States. The chart indicates a massive spike in median price overtime.

  3. Desire for amenities: Many BTR developments offer hotel-like amenities that appeal to modern renters.

  4. Professional management: Renters benefit from consistent, professional property management services.

For real estate investors, BTR communities present an intriguing opportunity. These properties often boast higher occupancy rates and rental yields compared to traditional multifamily investments. Moreover, the National Multifamily Housing Counsel reports that BTR communities have shown resilience even during economic downturns.

However, the rise of BTR isn't without challenges. Zoning laws in some areas may need to be updated to accommodate these developments, and there are concerns about their impact on local housing markets.

As a renter, BTR communities offer the feel of single-family living without the responsibilities of homeownership. For real estate professionals, understanding this trend is crucial for advising clients and identifying investment opportunities.

Opportunities and Challenges in BTR

Whether you're a renter looking for a new home or an investor exploring new avenues, the build-to-rent revolution is a trend worth watching in the ever-evolving real estate landscape.

Remember, local market conditions can vary significantly. Always consult with experienced real estate professionals for the most up-to-date information on rental trends in your area.