Single Family Build-to-Rent Expected to Hit All-Time High in 2022

Posted in Blog on by

What Are Single-Family Build-to-Rent Communities?

The single-family build-to-rent (SFBTR) concept is relatively new, originating in the 1980s. It gained traction after the 2008 Great Recession and again now in the Covid-19 era with so many migrating out of the nation’s cities to find space and privacy. Single family rentals have always been around. What’s new is the business model based on building entire communities of single family homes for the specific purpose of renting them.

Lower home ownership rates (66% and slowly declining) reflect economic and demographic realities, but those alone don’t tell the whole SFBTR story. There are plenty of folks who want a single-family home suburban lifestyle without all the hassles of home ownership or don’t want to tie up their capital in a down payment on a relatively illiquid asset or be burdened with monthly mortgage payments. For some, renting in a SFBTR community is a logical next step from a unit in a multifamily rental property to owning their own home. For others, particularly for those who value geographic mobility, renting a single-family home rather than buying one is simply a lifestyle preference.

SFBTR communities are planned communities that may or may not include single family homes for sale as well as homes purpose-built for the rental market. They typically are located in areas with good schools, jobs, cultural venues, and recreation facilities. Some have community amenities of their own, such as community pools, playgrounds, fitness centers, and bike paths or walking trails. 

For the most part, SFBTR communities are owned by their developers and investors and operated and maintained by property management professionals.

Searching for an experienced partner to manage your rental property? Palmetto State Properties is known for their ability to manage, market and maintain rental properties in the greater Charleston, SC area. Contact us today.

Where Are Single-Family Build To Rent Communities Found?

Heading into 2022, there were about 90,000 single-family rental homes in approximately 720 Single-Family Build To Rent communities in the United States. The vast majority of SFBTR communities are located in high growth areas, usually on the outskirts of major metropolitan areas or in the surrounding suburbs. Many experts in South Carolina agree that SFBTR properties are a commodity right now.

Because of the large tracts of land needed for SFBTR development, urban build-to-rent communities are more common in Texas and the Southwest, where there is room for urban expansion. Suburban SFBTR communities are more common in the higher-density Midwest and Northeast.

A study by Rent Café identified these as the most popular metro areas for SFBTR communities:

  • Phoenix, Arizona (6,420 homes)
  • Columbus, Ohio (4,780 homes)
  • Dallas, Texas (4,290 homes)

The top cities for SFBTR communities are:

  • Las Vegas, Nevada (2,520 homes)
  • Houston, Texas (1,620 homes)
  • Tucson, Arizona (1,320 homes)
  • Phoenix, Arizona (1,280 homes)

The five largest SFBTR communities in the U.S. are in:

  • Las Vegas, Nevada (two communities totaling 1,638 homes)
  • Chino, California (805 homes)
  • Bellport, New York (795 homes)
  • Box Elder, South Dakota (780 homes)

Is There an SFBTR Renter Profile?

There are few demographic details that set SFBTR renters apart from other renters. Renters who prefer a single-family rental over a multifamily rental unit may simply have reached a point in life where they prefer a single-family lifestyle but aren’t willing or able to commit to homeownership. A home in an SFBTR community may be the best option for people in transition, perhaps due divorce or widowhood, or in anticipation of moving to another area at some point.

SFBTR Construction Rates

According to Yardi Matric data, more build-to-rent homes were constructed than ever before—6,740 to be exact. And according to the author of the Rent Café report, an estimated 14,000 build-to-rent homes were scheduled to be completed in 2022. 

According to the National Association of Home Builders, the first quarter of 2021 saw an unexpected 22% year-over-year decline in SFBTR housing starts. That decline may or may not be attributable to the pandemic. Another source was quoted in the Wall Street Journal as predicting that the number of SFBTR homes built annually would double by 2024. 

Despite the conflicting numbers and predictions, there are strong indications that the pace and extent of SFBTR development will increase in the near future. One reason for optimism about the future growth of SFBTR housing is that many industry experts regard it as one of the most risk-averse investment sectors, making it easier to obtain capital for new development projects. Additionally, there are enough projects already in progress to provide a good supply of new SFBTR homes to meet the growing demand. 

So, while somewhat uncertain economic conditions in mid-2022 may make it difficult to pin a number on the near-term expectations for SFBTR development projects, it’s safe to say that the SFBTR trend is here to stay and likely to continue to grow in the coming years.

Get in touch today to find out how we can help.

Archives