JANUARY 20, 2022
As renters look for a lifestyle change that offers more space and privacy, communities of single-family houses built for the purpose of renting have become the hottest trend in housing.
2021 was a record year for single-family rental home construction, with 6,740 new built-to-rent homes completed. And, the trend is growing rapidly: twice as many homes are now under construction, for a total of nearly 14,000 set to open their doors to renters beginning this year.
Cleverly described by some as “horizontal apartments,” communities of houses built for the sole purpose of renting are becoming the hottest topic in residential living. But, single-family rentals are not a new concept. Although they proliferated in the aftermath of the 2008 housing crisis, this time it’s different. The pandemic created an unprecedented demand among renters for space and privacy, which houses can address much better than apartments.
According to a recent survey of 3,300 renters on rentcafe.com, as many as 78% said they were interested in living in a community of single-family homes. The survey confirmed the rising interest in single-family rentals that began to take shape last year, including on rentcafe.com, where searches for “homes for rent” tripled in 2021 compared to the previous year.
What’s more, the race to build more of this in-demand type of rental is accelerating: In 2021, 6,740 new rental homes in built-to-rent communities were completed — the highest yearly total to date, according to Yardi Matrix data. But, this is just the beginning of a trend we’re bound to see much more of as the pace of construction is set to double beginning this year. Specifically, there are an estimated 14,000 built-to-rent homes under construction in the United States.
Built-to-Rent Communities Present in Both Suburban & Urban Areas
Because they need large lots of land to build on, rental home communities are prevalent in low-density areas, with the majority (61%) located in suburbs. “Undoubtedly, coronavirus has also impacted upon this increased popularity,” said Christopher Michael, architect and founder of archisoup. “Many are now moving out of the cities and apartment living to seek out more space in rural and suburban locations.”
This aligns with our renter survey, which also revealed that besides the main reasons for choosing a single-family rental over an apartment — more space (29%) and more privacy (25%) — these types of rental homes are also attractive for families. More precisely, 19% of respondents believe a single-family rental is more suitable for their family, especially if the community is located in a quiet, family-friendly area in the suburbs.
Phoenix Ranks as #1 Metro for Built-to-Rent Houses
The Phoenix metro is at the forefront of homes-for-rent development with a total of 6,420 houses in built-to-rent communities. The area is also a leading metro in new apartment construction, making it one of the top coveted areas for renters overall.
Next, Columbus, OH, is the second-most popular metro, with 4,780 homes in built-to-rent communities. On the fast track to becoming one of the country’s most prosperous job hubs, the area surrounding Ohio’s largest city has seen consistent population and employment growth in recent years.
Meanwhile, as a booming job hub and a leading force when it comes to new apartment construction, the Dallas metro is also flourishing in single-family rentals, with the third-highest number of home rentals in the U.S. at 4,290.
Las Vegas Top City for Built-to-Rent Houses
Although most cities don't have the land necessary for sprawled communities, 39% of single-family homes are located in urban areas. Las Vegas has an advantage in that regard, ranking as the #1 city with the most single-family rentals (2,520). Coincidentally, Vegas is also home to the two largest built-to-rent communities in the country.
Houston, TX, has the second-highest number of homes in built-to-rent communities — 1,620. One of the largest cities in the country in terms of surface area, Houston is able to accommodate large residential communities and respond to the high population influx it’s experiencing as one of the most popular destinations for business relocation. Similarly, another Texas city is also among the top markets to invest in rental homes: the city of Dallas (in fifth spot), currently has 1,270 completed rental homes.
Arizona logged five cities in the top 20. The most notable are Tucson and Phoenix — two cities with increasing numbers of built-to-rent projects that tally around 1,300 completed single-family rentals each.
View source version on rentcafe.com:
https://www.rentcafe.com/blog/rental-market/market-snapshots/built-to-rent-single-family-homes-double-in-2022/
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