You’ve likely heard rumblings about the belief that build-to-rent and single-family-rental communities are contributing to a housing affordability crisis in the United States. In many cases, rentals cost more per month than a mortgage payment in the same area would. Furthermore, because they are owned by investors who rent them out, those homes aren’t available for buyers. Here’s the kicker though: rental homes aren’t displacing homes for purchase and homebuyers aren’t necessarily the nation’s largest demographic anymore. Let’s talk about why BTR and SFR development is actually a solution to affordability problems (and signals a change in sentiment).
A recent article written by Bisnow Atlanta’s Jarred Schenke examines the dynamic from the perspective of Atlanta and its surrounding suburbs. During the publication’s Atlanta Multifamily and SFR Boom, developers and investors alike said that rental communities are actually helping more people live in the houses and neighborhoods of which they dream.
This is true partly because of the difficulty in saving a down payment suitable for a larger home in a more affluent area. But it also connects to the question of maintenance. Panelist and Haven Realty Capital principal Chris Turitto said, “It’s like a really well-funded [homeowner’s association]. It’s always going to be maintained. There’s only going to be one owner in the HOA, so you’re not going to get infighting.”
The resulting residential areas invite a greater number of people to settle into nicer places. And, as Quinn Residences CEO Richard Ross noted, it isn’t replacing opportunities to purchase. “This perception that rental is taking away from homeownership is not borne out by the facts. We’re bringing professional management to what in the past has been scattered sort of mom-and-pop, haphazard rental companies.”
In addition to these insights, RangeWater Real Estate managing director Karen Key emphasizes that the desires of buyers (or not buyers, as it were) are shifting drastically.
“We’re actually seeing the empty nesters and millennials rent so that they can buy vacation homes. It’s not that they’re scared to be tied to a mortgage. They know where they want to vacation for 30 years, but they may not want to live in the same place in 30 years.”
Poignantly, Key adds, “We’re going to continue to see that American dream shift. These are very much renters by choice.”
Read the entirety of Schenke’s fascinating analysis in the Bisnow article: Developers Of Build-To-Rent Single-Family Pushing Back On Opposition
