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The Rise of Build-to-Rent Homes in the DFW Housing Market

October 12, 2023

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The DFW housing market has experienced a significant decline in home sales

The DFW housing market has experienced a significant decline in home sales, but that hasn’t stopped the population of the region from increasing. As mortgage rates and home prices continue to rise, many potential homebuyers have turned to the rental market instead. This shift in demand has led to the rise of build-to-rent homes in the DFW area.

Last year, the DFW region saw the construction of nearly 2,800 new build-to-rent homes, a five-fold increase compared to the previous year. This trend is not unique to DFW, as eight of the top ten metro areas for build-to-rent homes in the US also hit decade highs in construction. Dallas ranks second on that list, just behind Phoenix.

The rise of build-to-rent homes in the DFW area can be attributed to several factors. The region has experienced a significant influx of residents, coupled with a low unemployment rate, making it an attractive market for developers. Additionally, the high home prices and rising interest rates have made renting a more affordable option for many consumers.

For developers, build-to-rent homes offer an opportunity to meet the high demand for rental properties, particularly in the suburbs of major cities like Dallas. These homes are designed and operated to align with the practices applied to conventional multifamily assets, making it easier for developers to oversee rental operations. This model also allows developers to cater to the unique demands of different markets and provide long-term, affordable living solutions.

Build-to-rent homes are not only popular among younger, single or newly married consumers who want to test out a community before committing to homeownership, but also among older consumers who desire access to single-family home amenities with less commitment and reduced upkeep.

While the DFW housing market has recently seen a decline in home prices, it may take time for the homebuying market to pick up again. As a result, the demand for build-to-rent properties is expected to continue to increase. Developers are exploring the potential of combining build-for-rent homes with for-sale single-family homes in a single community to maximize the land available and attract a wider range of clientele.

This trend benefits consumers as well, offering greater flexibility to meet their varying circumstances and housing needs. It allows them to experience a sense of homeownership with amenities like a backyard, even without the ability to make a down payment on a home. It also provides a sense of community and the convenience of managed properties.

In conclusion, the rise of build-to-rent homes in the DFW housing market is a response to changing market conditions, increased demand for rental properties, and the desire for flexibility among consumers. This trend is likely to continue as developers and consumers alike recognize the benefits of this housing model.

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