Expert Analysis: Build-to-Rent Market for 2022

After recording one of the hottest record years for the build-to-rent industry, 2023 is expected to be driven by demand for homes with more privacy and space. According to a report by YardiMatrix, over 13,910 build-to-rent homes were constructed in 2022, marking it as one of the strongest growth years for single-family residences. In this article, we will comprehensively analyze the build-to-rent market of 2022 and the predictions for the upcoming year. So, without further ado, let’s begin.

Increase in Build-to-Rent

Since 2021, there has been a 106% increase in build-to-rent homes across the United States. A survey by RentCafe revealed that compared to apartments, approximately 78% of people are interested in shifting to build-to-rent homes. 

However, real estate experts believe this is just a fraction as the real number of build-to-rent properties is as big as 110,000 to 120,000 this year. In light of this, the president of investment sales, Trevor Koskovich said, “We are seeing a massive development pipeline because the product has fared well operationally across the U.S. It [SF BTR homes] has proven to be the more desirable rental option in comparison to traditional multifamily.” There was also a tremendous amount of capital raised in the space, and developers are deploying that money aggressively. I think there has been a demographic shift, and tenants really prefer this type of product.”

Millennials and Gen-Z Driving the Demand

Fixr conducted a survey in 2021 according to which 44% of tenants of build-to-rent homes were expected to be young couples with children, 30% were couples with no kids, 13% were retired people, and 13% were singles who were looking for a calm and comforting neighborhood. While the years might have changed, Gen Z and Millennials have been the biggest renting force of build-to-rent single-family homes in 2022. 

Our Prediction for 2023

With 2023 just around the corner, real estate investors are looking for profitable investment opportunities. In this section, we will be discussing the top four predictions of the build-to-rent sector for the next year. 

  1. Renters Looking for Diversified Space:

Many companies still follow the hybrid or work-from-home culture, due to which families will continue to look for homes in peaceful and safe neighborhoods, making build-to-rent an appealing choice. A report by PwC proved that when buying or renting a home, people prefer homes with an extra room or space, a backyard, a garage, or a small garden. 

  1. Renters from All Age Groups:

The young working generation doesn’t have time to keep up with the hassle of owning a house. However, they still want a private place to live in. Therefore, the interest of Millennials (the largest generation in the US) is expected to grow in build-to-rent homes. Furthermore, older residents will also be looking for homes offering convenience and accessibility, like safety rails in the bathrooms and elevators. Because of this, homeowners will need to up their rental marketing, payment, and communication game. 

  1. Above-Average Rent Prices:

As inflation continues, rent prices are expected to rise by 8.4% in the first quarter of 2023. Additionally, Moody’s Analytics forecasted a rental growth of 5 to 7% in the next year. 

Final Thoughts 

As the build-to-rent industry continues to expand, the primary factor that will likely keep it popular in the future appears to be the persistence of financial constraints, including increasing mortgage rates. So, if you have enough capital and are searching for long-term investment opportunities, start investing in build-to-rent homes today!