How Is Build-to-Rent Changing the U.S. Rental Market?

For the last 15 years, the percentage of tenants has drastically increased in the United States. While the aftereffects of the 2007 real estate market crash are still reverberating, the current economic situation and student loans have made homeownership difficult for not only the upcoming generations (Millennial and Gen-Z) but everyone else as well. 

In response to the never-ending high demand, a new real estate market has caught our eye and changed the property investment and homeownership game in the United States; build-to-rent. Otherwise known as “Build-for-rent,” BFR, or BTR, build-to-rent properties are specifically constructed for long-term renters, making them the perfect real estate investment. Keep reading to learn how the build-to-rent is changing the U.S. rental market.

The American Dream of Owning a Home Has Changed  

Did you know that more than 39% of the U.S. rental market is covered by build-to-rent homes? This is the highest percentage since 1965. The Urban Institute reports that over 16 million rental properties in the United States are build-to-rent houses, which is expected to increase to 29 million by 2030. Build-to-rent homes were initially just a source of residence for people. 

However, time has changed, and due to the amendments in the tax code, U.S. citizens are no longer buying the dream of homeownership; instead, they prefer renting one. This is fuelling build-to-rent growth significantly, making it one of the fastest-growing sectors in the U.S. rental market. While people see it as an opportunity to live in a single-family house, investors see it as a chance to earn income without worrying about maintenance and management costs. 

Build-to-Rent Has Set a New Threshold of Affordability 

According to a report by CNBC, rent for build-to-rent homes has been increasing by 4.5% annually. In contrast, the rental prices for multifamily properties are growing by 3% every year, taking the margin of rental prices to the next level. Thus, if you still haven’t invested in a build-to-rent home, you are missing out on a great opportunity to diversify your portfolio and build wealth. As per a report by Roofstock, build-to-rent is a $3 trillion industry in the U.S. rental market, out of which over 1 million houses are being traded among investors every year. 

Build-to-Rent Is Growing

Build-to-rent homes are the highlight of the U.S. rental market, and there’s a reason. Following the Great Recession, the U.S. economy is still recovering, which has made it nearly impossible for people to own a house. Build-to-rent offers people an easy and convenient path to community, comfort, and house ownership which is precisely why it is one of the best investment options in real estate. No matter what era we live in, people will always prefer living in a single-family home, and build-to-rent offers you all the merits of owning a house without the hefty mortgage rates. According to a report, 67% of build-to-rent homes are owned by people between 25 – 54 years of age, and the numbers are only expected to grow.

Final Thoughts 

In a nutshell, build-to-rent homes have made it easier for families to live independently even if they don’t have the budget to own a house. On the other hand, investors have come to recognize the value of investing in build-to-rent homes and have started renting them out to earn a passive income instead of selling houses for a profit. This new housing trend has impacted the U.S. rental market and is here to stay. So, whether you want to construct a build-to-rent house for investment purposes or want to rent out the property for stable cash flow, build-to-rent is the solution. 

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