By Janet Miranda
April 23, 2024
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Skyrocketing home prices are sending home buyers towards rentals
As the rental market picks up steam in the Houston area, demand for more build-to-rent homes is growing as more residents are skipping on closing on a house to lease one instead.
The Houston metro area ranked third in the U.S. for build-to-rent homes under construction, according to a new study by RentCafe. Houston has recently seen the sprouting of many communities by developers who are catering to so-called "renters by choice:" people who want to experience single-family home living without getting saddled with an expensive mortgage and any headaches that come with purchasing and maintaining a home.
Skyrocketing home prices are sending home buyers towards rentals with Houston totaling 4,836 build-to-rent units underway with an expected completion date of next year. Houston follows Dallas with 6,481 and Phoenix, Arizona with 7,236. In 2023, 488 build-to-rent homes were completed in Houston, a whopping 67 percent increase from the previous year, per the report.
Texas has the most build-to-rent units under construction, with the Lone Star state predicted to add 15,054 new units in 2026. Besides Houston and Dallas, San Antonio and Austin will add an estimated 1,886 units and 1,851 units, respectively. All four Texas metros landed among the nation's top 20. Houston has the fourth newest stock of build-to-rent homes, with 2,402 out of 5,700 rental homes built in the last five years, according to RentCafe's new data.
High mortgage rates are pushing homebuyers into rentals, with rental markets in Houston seeing rising demand in available inventory, according to a new report by the Houston Association of Realtors. March saw a 4.8 percent increase in leased listings in addition to an 8.9 percent rise in new listings, compared to the same period a year before. The housing market saw a mixed start to its spring homebuying season, the busiest sales period in the year, March saw a 7.5 percent decrease in homebuying rates. Home prices in Houston rose to an average of $412,464 in the same period.
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