The recent build-to-rent (BTR) boom in the U.S. marks a significant shift in the housing market, particularly affecting individuals and families who prefer renting over buying single-family homes. This emerging trend is flourishing, especially in states like Texas, Arizona, and Florida, where rising home prices, substantial down payments, and high mortgage rates have made homeownership less accessible. BTR homes aim to fill this gap by offering the benefits of renting while providing the amenities and space typically associated with owning a home. This approach caters to those seeking modern facilities and larger living spaces without the long-term financial commitment.
Factors Driving the BTR Boom
The growing popularity of build-to-rent communities can be credited to several key factors that are increasingly resonating with potential renters. One of the primary attractions is the flexibility of renting, which is further enhanced by community amenities and maintenance services that BTR properties often include. This combination adds a layer of convenience and comfort that is hard to come by in traditional rental arrangements. Moreover, the COVID-19 pandemic has prompted many to reconsider urban living, leading to a suburban resurgence. This shift has increased the demand for more spacious homes that can accommodate remote work and offer recreational options, such as private backyards.
According to a Point2Homes report, the BTR market is poised for substantial growth, with over 110,000 single-family rental homes in 613 BTR communities currently under construction across the U.S. Upon completion, this will amount to a robust 53.5% expansion in existing inventory. This surge in development indicates a strong market response to the evolving needs and preferences of renters who are looking for spacious and well-equipped living environments. The trend also suggests a significant shift in how Americans are approaching housing, increasingly opting for flexibility and convenience over traditional homeownership.
Leading Markets in BTR Development
Phoenix, Arizona, stands out as a leading metro area in the BTR sector, with the city actively developing 13,113 single-family rental units. Phoenix’s strong job market, hosting numerous Fortune 500 companies, has made it an attractive destination for new residents. Additionally, the city’s growing focus on sustainability and quality of life contributes to its appeal. Several smaller cities within the Phoenix metro area, such as Buckeye, Surprise, Goodyear, and Queen Creek, are each adding substantial numbers of new rental houses, ranging from 1,000 to nearly 2,000 units.
On the state level, Texas is leading the charge with an impressive 21,812 single-family rental homes under construction. Dallas is the focal point of this development within Texas, contributing 8,470 units to the state’s total. Houston, Austin, and San Antonio are also key players in the BTR market, with thousands of units currently under construction. Texas’s favorable tax policies and relatively affordable housing market are significant factors driving this surge. The state’s economic diversity also plays a crucial role, attracting a wide range of residents looking for rental options that offer both space and affordability.
Southeast and Other Emerging Markets
Following the leading markets of Phoenix and Dallas, Atlanta, Georgia, ranks third among metros with 6,885 single-family rentals currently under development. Atlanta’s favorable business climate and rapid population growth perpetuate the high demand for rental housing. This dynamic is strengthened by the city’s robust job market and overall economic health, making it a prime location for BTR investments. Other Southeastern metros also show strong activity in the BTR sector. For instance, Charlotte, NC; Orlando, FL; Raleigh, NC; and Huntsville, AL, are each contributing between 2,000 and 5,368 new units to the market. These cities benefit from business-friendly policies and growing job markets, which attract new residents looking for rental options.
Beyond these prominent regions, 14 other metro areas are experiencing significant BTR activity, with each set to add over 1,000 rental homes. The pandemic has had a notable influence on these trends, shifting rental demand away from dense urban apartments to more spacious and affordable homes in secondary markets. This shift is also driven by rising home prices and the increased prevalence of remote work, which allows individuals greater flexibility in choosing where to live. Consequently, secondary markets are becoming increasingly attractive for BTR investments, offering both affordability and a higher quality of living.
State-Level Expansion and Future Projections
The BTR sector is experiencing substantial growth not just in prominent states but across a broad geographic spectrum. Point2Homes reports that the five states with the most BTR units under development will see their supply increase by at least 50% upon project completion. North Carolina leads this charge with an expected rental inventory surge of 152%, while Texas will experience a 70% increase. This escalation underscores the demand for rental homes, especially in markets where homeownership is increasingly out of reach due to economic conditions.
States like Nebraska, Rhode Island, Delaware, New Hampshire, New Mexico, and Virginia are also seeing significant expansion in their BTR inventories, with projected increases exceeding 100%. Notably, Nebraska anticipates a rental supply increase of 255%, highlighting the substantial growth potential in less traditionally saturated markets. These trends confirm that BTR is dramatically reshaping the U.S. housing market, offering an appealing alternative for renters who need more room without the heavy commitment of homeownership. This shift is facilitated by streamlined zoning and permitting processes, resulting in faster construction timelines and more affordable rental options.
Challenges and Market Dynamics
Despite the optimistic outlook, the BTR market faces potential slowdowns in the future due to rising material costs and increased labor expenses. These challenges could impact the pace of new developments, potentially making it more costly to bring BTR projects to completion. However, the persistent demand for spacious rentals is likely to keep the BTR market expanding. Doug Ressler, a senior analyst and manager of business intelligence at Yardi Matrix, highlights that BTR offers crucial advantages in terms of affordability and space, which are increasingly sought after as urban areas become more congested and expensive.
As more people opt for suburban living, BTR properties provide a valuable middle ground by offering spacious, affordable housing while maintaining connectivity to urban centers. This trend is particularly appealing to those who identify as renters by preference, driven chiefly by high mortgage rates. Renting a BTR unit generally proves to be more economical than purchasing a starter home, potentially saving tenants up to $1,000 per month. This economic advantage, coupled with the quality of life offered by BTR communities, makes this housing option increasingly popular.
The Future of BTR Communities
The recent boom in the build-to-rent (BTR) market in the U.S. marks a notable shift in the housing landscape, particularly impacting those who prefer renting to owning single-family homes. This growing trend is particularly vibrant in states like Texas, Arizona, and Florida, where surging home prices, hefty down payments, and high mortgage rates have made homeownership increasingly difficult for many people. BTR homes are designed to bridge this gap by providing the advantages of renting while still offering the amenities and spaciousness typical of homeownership. This model is especially appealing to individuals and families who seek modern conveniences and larger living spaces but wish to avoid the long-term financial commitment that comes with buying a home.
Beyond the financial aspects, BTR properties often feature community-oriented amenities such as swimming pools, fitness centers, and playgrounds, enhancing the overall living experience. This approach caters to a growing demographic that values flexibility and lifestyle without the chains of mortgage debt. As the housing market continues to evolve, the BTR trend stands out as a pivotal development, providing alternatives for those caught between the high costs of homeownership and the desire for a higher quality rental living experience. Thus, BTR is reshaping the idea of what renting can look like in modern America.
