By Nathalie Voit
According to the U.S. Census Bureau, the market for single-family rentals grew 30% between 2019 and 2020. Built-to-rent single-family homes are now the fastest-growing sector of the American housing market, accounting for approximately 6% of all new development projects.
The properties are an attractive option for everyday Americans who don’t want to shell out the money for a down payment or deal with the traditional pitfalls of homeownership like maintenance. In 2019, single-family rentals accounted for over one-third of the U.S. renter population (41%), outpacing the share of the U.S. renter population living in apartments (37%), reported the National Multifamily Housing Council. The trend only accelerated in 2020 as the COVID-19 pandemic ushered in an era of urban flight.
During the pandemic, American workers traded in the perils of city living for the freedom and flexibility of the suburbs. No longer tied to the office, people flocked to suburban communities and set up roots in larger and more affordable units.
Developers have taken notice of the trend and invested in dozens of single-family rental projects across the country.
“More and more consumers – including a growing number of baby boomers who have owned homes for many years – are choosing to rent rather than own a home,” said Josh Hartmann, CEO of NexMetro Communities, a developer in the Sun Belt.
“Demand for single-family rental homes remains incredibly strong as consumers seek this unique lifestyle experience that combines the best of a detached home and mortgage-free, maintenance-free living,” Hartmann said.
NexMetro is now considered an industry leader in the single-family rental space. The company is currently expanding its presence in central Florida, investing in a massive built-for-rent housing project in the Tampa Bay area. The developer has over $1 billion invested in up-and-coming cities like Phoenix, Dallas, and Denver.
While many still consider homeownership a better long-term bet, the shift towards remote work has offered an escape for those unsure when, or if, they will return to their old lives.
“Residents are primarily renters by choice,” said Hartmann. “They have the wherewithal to buy but are choosing to rent because of their life stage and preference. For them, it’s a lifestyle play.”
Single-family rental living is particularly appealing for married or just-married couples not looking to settle in the long-term but wanting to escape the confinements of city life.
“We really wanted to have the flexibility to enjoy life versus having to worry about repairing the roof or cutting the grass rather than heading to the beach,” said Brian Voorhees, a vice president of underwriting for an insurance broker who recently moved with his wife and two children from their 3,600-square-foot New Jersey home to 360 Communities at Shearwater, a brand-new single-family and townhome rental community near Jacksonville, Fla.
“We didn’t want to have to worry about all the potential pitfalls of homeownership.”
According to 2019 census data, approximately one in three of the country’s 122.8 million households are single-family rental units. The numbers are predicted to rise as the build-to-rent revolution gains ground amid soaring housing prices.
“The majority of opportunities in this country have traditionally been rooted in the Old World American dream, with a white picket fence, two and a half kids, and a dog. But that is fundamentally changing,” said Paraag Sarva, chief executive of Rhino, a start-up that specializes in security deposit alternatives for renters.