In a recent report, it was revealed that there are currently SFR rentals under construction in 613 communities, with the expansion expected to increase BTR inventory by over 53%. Occupancy levels in BTR properties are also high, hovering near 95%. Analysts at Yardi Matrix believe that this expansion will provide a crucial benefit to renters seeking affordable housing options.
The report also highlighted a shift in preference among BTR residents, with more individuals now choosing to rent by preference rather than necessity. High mortgage rates have been cited as a major obstacle to home ownership, making BTR homes a more affordable solution in today’s expensive housing market.
According to senior analyst Doug Ressler, renting a BTR unit is on average cheaper than buying a starter home, with potential savings of around $1,000 per month. This cost difference is largely driven by high mortgage rates and elevated home prices.
Leading the way in the construction of SFR units are Texas and Arizona, with Texas having 21,812 units under construction and Arizona following closely behind with 13,972 units. Other top states include Florida, North Carolina, and Georgia.
At the metro level, cities like Phoenix, Dallas, Atlanta, and Raleigh have seen significant increases in SFR inventory, ranging from 70% to 334%. Texas and Arizona are attractive locations for migrating homeowners due to factors such as strong job markets and sustainability efforts.
Looking ahead, states with low inventory like Nebraska, Rhode Island, Delaware, New Hampshire, and North Carolina are expected to see substantial increases in SFR inventory once construction is completed. Builders and developers are adapting to meet the demand for affordable single-family spaces in BTR communities.
Although the SFR market in build-to-rent communities faced challenges in the first three quarters of 2024, analysts emphasize that the sector remains vulnerable to economic factors such as rising construction costs and concerns about oversupply. Despite this, new construction continues to outpace existing home inventory in the market.
Overall, the demand for single-family rentals in BTR communities is on the rise, signaling a shift in the real estate market towards more affordable housing options for renters.