The American dream of homeownership may be shifting gears. Single-family homes built for rent are popping up across the country at record rates. This new trend, known as built-to-rent, is primarily concentrated in major metros like Phoenix and Atlanta but is spreading to all regions.
According to the National Association of Home Builders (NAHB), construction of 18,000 single-family built-for-rent homes started in the first quarter, a 20% spike over the same time a year ago.
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“When mortgage rates move higher, and it’s harder to buy a home, renting becomes more of an option,” NAHB Chief Economist Robert Dietz told CNBC.
Built-for-rent communities are clusters of single-family rental homes in a professionally managed community with amenities such as swimming pools, tennis courts and dog parks. With no maintenance costs, homeowners association fees, or mortgage payments, built-for-rents have become a more economical alternative to homeownership that still gives young families the space they need to grow.
“People who can’t afford to buy in today’s high-priced housing market are opting to rent single-family homes instead,” National Association of Realtors Deputy Chief
Economist Jessica Lautz said.
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“We are seeing this growing move towards having built-for-rent properties in the U.S.,” Lautz said. “[Young adults] have to turn to rental properties because there is no alternative.”
According to Zillow, the asking rent for single-family homes in May was $2,262, up 0.5% month over month and 4.7% from last year. Renting an apartment in a multifamily building was less expensive at $1,896, up 2.6% during the same period.
Although the national median mortgage payment, at $2,256, was less than renting a single-family home, homeowners must also pay for costs that aren’t figured into a mortgage payment, such as maintenance, repairs, taxes, and insurance.
Last year, builders delivered about 97,000 built-to-rent homes — including those outside built-to-rent communities. That was up 45% from the year before and a record for the sector, according to John Burns Research and Consulting, which provides data on the housing industry.
In almost 90% of U.S. counties, renting is more affordable than owning a home, according to real estate research firm ATTOM.
“For many, renting is just the only affordable option,” Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School, told USA Today.
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This article Construction Boom: Built-For-Rent Homes Soar By 20% In Early 2024 With 18,000 New Units originally appeared on Benzinga.com
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