As renters seek more comfort and increased space, demand for build-to-rent single-family homes is rising in the United States.
“The demand for homes is still outgrowing the supply, and due to the higher costs of both the homes and mortgage interest rates, many people are finding that renting is just a more affordable option,” Doug Ressler, manager of business intelligence at Point2’s sister company Yardi Matrix, told The Epoch Times.
“On average, it costs about $1,700 a month to rent a home, as opposed to an average $2,500 a month for a mortgage payment.”
Yardi Matrix, based in Scottsdale, Arizona, provides data collection and research reports for investment professionals, equity investors, lenders, and property managers nationwide.
Point2 has been tracking build-to-rent housing units for the past decade.
In 2015, there was a slight dip to just 3,771 units; but every year afterward, that number continued to escalate. The biggest gain was from 2022 to 2023, when the numbers soared from 15,691 to 27,495.
By far, the largest rental demographic is millennials, aged 28–43.
“A lot of people are choosing to rent until they can afford to buy, and now many of them are being forced to rent for longer than they expected,” Ressler said.
“The older portion of Generation Z (aged 12–27) are just entering the market and typically choose to rent rather than buy due to the lack of affordable housing supply.”
Ressler said baby boomers (aged 60–78) are also beginning to gravitate toward rentals after selling a larger home and downsizing.
“Today’s home renters want outdoor space, garages, ultramodern appliances, open floor plans, lots of storage, and parking, Ressler said.
“They’re also looking for new, spacious homes with a lot of built-in technology.”
Point2 analyzed five million words from house rental listings across the United States that were active on its rental database website in August, ranking the keywords based on the number of times they appeared in descriptions.
Ressler indicated that renters also want at least 1,500 square-feet of space and transit-oriented developments. As they switch from apartment life to single-family home life, he noted, renters become more aware of their growing space needs and their desire for more comfort.
“Another major concern is safety,” Ressler said. “People want to be sure they’re secure in their homes—especially those who have young children.”
Outdoor space is also in high demand, as is a location in a walkable community that is close to retail, restaurant, and recreational facilities.
While the South and West continue to dominate the single-family home rental marketplace, Ressler said similar rental opportunities are starting to pop up in the suburban areas of major cities such as Chicago and Atlanta.
Zillow indicates that the United States is currently facing a deficit of 4.5 million in homes for sale, and Realtor.com contends institutional buyers may be partly to blame. It reports large investors bought 14.8 percent of homes on the market during the first quarter of 2024, removing those units from the pool of availability for individual buyers.
“We anticipate that the supply will not be corrected for another five to 10 years,” Ressler said. “Still, many renters who simply cannot afford to purchase a home—especially new construction—seem to be enthusiastic about moving into a new home with spotless living space.”
Empeople Credit Union, based in Moline, Illinois, compared the pros and cons of buying a home versus renting. Some of the negatives against buying include the large financial investment, no flexibility on moving to a new location, maintenance and repair, and property taxes. On the flip side, the pros of home buying feature the ability of build equity, tax benefits, having more control over your property, consistent payments, and stability.
Jessica Lautz, deputy chief of economics and vice president of research for the National Association of Realtors, told The Epoch Times that the biggest advantage of buying is being able to establish a long-term equity base. “When we look at an average homeowner, there’s about $415,000 in wealth as opposed to the average renter, with just around $10,000 in wealth.”
In addition, noted Lautz, homeownership offers steady monthly mortgage payments instead of rental costs that tend to rise every year. “Of course, purchasing a home does have its difficult challenges for first-time buyers,” she admitted. “Prices are higher, as are interest rates, although they are still lower than the historical average.”
Lautz suggests alternative options for younger buyers, such as multigenerational purchases, buying with a roommate, or purchasing an investment property with one or two apartments that can be rented out.
“We have been underbuilding here in the U.S., but don’t be afraid of older properties that may need some work and are available at a lower cost,” she said. “Any type of home improvement will always add to the home’s value and to its ultimate selling price.”
As for the lack of modern amenities often available in rental single-family homes, Lautz said that decision is up to the individuals involved. “It’s true that if you buy a home that needs updating, it may not have all the bells and whistles of a brand new rental home,” she said. “But then you won’t be gaining that housing equity, which is the quickest way to build wealth.”
