Property managers should get ready to ride a growing build-to-rent wave.
Unaffordable house prices and mortgage rates have pushed many would-be buyers into the rental market – particularly the single-family rental (SFR) segment. Compared to the smaller units and shared spaces of traditional multifamily rental complexes, build-to-rent single-family homes allow renters to enjoy most of the perks of homeownership without the upfront cost or responsibilities.
As demand for this housing option skyrockets, major metros across the country are turning to the build-to-rent (BTR) model to rapidly increase their rental housing stock. A record 14,500 BTR single-family homes were completed in 2022 – up 47% since 2021 – and another 44,700 are currently underway.
Compare that with RentCafe's January 2022 estimate of 14,000 BTR houses under construction and it’s easy to see why cities are placing their bets on this type of housing.
According to RentCafe, Texas leads the nation in BTR housing, with a combined total of 16,498 units constructed in Dallas, Houston, Austin, and San Antonio last year. An additional 9,000 are in the pipeline.
BTR's occupancy rate of 97% surpasses the 95% average for apartments, which has caught the attention of institutional investors. MetLife Investment Management reports that institutions controlled 5% of the 14 million single-family rentals in the US in 2022, and could own more than 40% by 2030.
While some may see institutional investors buying pre-developed build-to-rent housing or building their own as providing much-needed legitimacy to an emerging market, small and midsize property managers are concerned by their predicted takeover. But by showcasing their local expertise and using PropTech to manage rental payments and other admin quickly and efficiently, smaller businesses can compete more effectively with “faceless, corporate” rivals.
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