National Homebuilders Are Developing Single-family Rental Home Communities Though-out the U.S.
Homebuilding titans are moving into the rental business by constructing entire communities of rental homes. The business model stretches back to the 1980s and took off after the Recession of 2008. Known as build-to-rent (BTR), single-family rental (SFR) and single-family-built-to-rent (SFBR), the communities are attracting significant interest and capital investment as homeownership in the country is below 66% and expected to keep declining over the next 20 years.
Conflicting Data
Some numbers indicate continued growth for rentals in general, but not specifically BTRs. In May, Robert Dietz, Chief Economist for the National Association of Home Builders (NAHB) said, “Counter to expectations, the number of single-family homes built-for-rent (SFBFR) construction starts posted a year-over-year decline for the first quarter of 2021.”
Dietz also pointed to NAHB’s analysis of U.S. Census data saying, “There were approximately 7,000 SFBFR starts during the fourth quarter of 2020. This was a 22% decline relative to the first quarter 2020 total of 9,000. Over the last four quarters, 42,000 such homes began construction, which is relatively flat compared to the 41,000 estimated SFBFR starts for the four prior quarters.” These numbers span the time of the pandemic—which may or may not be playing a role in overall trends.
In June 2021, the Wall Street Journal quoted Hunter Housing Economics, stating that 6% of the homes currently being built in the U.S. are BTRs. Hunter Housing is based in West Palm Beach, Fla., and is headed up by Economist Brad Hunter, who has told economic fortunes as a Chief Economist for Home Advisor and Metrostudy.
Hunter went on to predict that the number of BTRs built annually will double by 2024. Taylor Morrison, which is ranked No. 6 on the 2020 Builder 100 list of homebuilders, is in the BTR business and said that BTRs could eventually represent half of their output if the trend continues.