Based on the National Association of Home Builders’ review of the Census Bureau’s Quarterly Starts and Completions report, the demand for build-to-rent homes is currently rising. The data for Q1 2024 shows that roughly 18,000 single-family homes were constructed specifically for rental purposes, which was a 20% increase from Q1 2023.
The need for rental real estate is clearly on an upward trend due to factors such as high mortgage rates and limited supply. Additionally, home prices in general have become unaffordable which is funneling prospective homebuyers into the rental arena. This is understandable since renting has been labeled more economical than owning a home in a recent report by ATTOM, a national property data company. The data revealed that renting a medium three-bedroom home is more affordable than buying one in 90% of U.S. local markets.
Kaycee Kisling, managing director of multifamily investments at Mark-Taylor Investment Management, brings to light the reality of the situation as she states, “The cost to buy versus rent in the United States has not been this out of whack in most people’s lifetimes since back to maybe 1980. From an economic side, it really serves the needs of a resident that is ready to move into a different phase of life or looking for those levels of comfort. I think we’ll find that a lot of people choose to stay in this product type long term for the conveniences.”
Related Article: Report States Renting More Affordable Than Buying Indicating Financial Security for Investors
Demand for Build-to-Rent Homes Has Tripled Over the Past Three Years
The growth of the build-to-rent housing sector reached new heights by 2023 with the completion of nearly 27,500 new units. This milestone marks a 10-year, all-time high for the industry and represents a 75% increase compared to the previous year. In addition to this, the number of build-to-rent houses finished in 2023 was three times that of 2021. This fast-paced growth highlights the skyrocketing demand for rental properties and shows that significant investments are being made to meet the high demand.
The American Dream is Evolving from Owner to Renter
With unaffordable housing prices and most not having a sizable savings these days, along with many living paycheck to paycheck, sights are set on living the American Dream out in a rental home.
A 2024 American Dream Report, published by the property management software company Entrata, reveals a significant shift in attitudes towards homeownership among renters. According to the report, which surveyed 2,000 renters in January, 41% of those surveyed stated that their vision of the American Dream does not include owning their own home. It turns out that 20% expressed they expect to rent for their entire lives, a 33% increase from 2021.
The study also highlights that 23% of participants appreciate the location flexibility that renting offers, while 17% value the financial freedom of not having a mortgage. Overall, 66% of renters believe that renting aligns better with their current lifestyle than owning a home.
U.S. Citizens are slowly letting go of the fact that you have to buy to live the American Dream. Ramit Sethi, host of the Netflix series "How to Get Rich," touches on this, "Somehow, we've been led to believe that you have to own a home in order to be living the American dream. And that's just not true. For a lot of people, renting can actually be a better financial decision."
Investors Get Ahead of the Game as the U.S. Evolves into a Renter Nation
As the demand for build-to-rent homes increases, so does the opportunity to generate great wealth through rental real estate. This opportunity will only increase with the current economic climate that's continually pushing mortgage rates and housing prices up, while persistent inflation diminishes the paychecks and savings of everyday Americans.
Investing in rental properties is one of the most secure and lucrative asset types to buy during unstable economic times. With the need for rentals surging, and rents rising, it certainly equates to a wise portfolio piece.
Related Article: New Construction Build-to-Rent Properties Are a Good Investment with a Skyrocketing Demand
Invest in New Construction Built-to-Rent Properties
Given the rising demand for build-to-rent homes, now is the perfect time to invest in a new construction rental property. Morris Invest specializes in creating high-quality investment properties that offer steady rental income, long-term equity growth potential, as well as the placement of a property manager and tenant from the start.
Our properties are located in areas that have booming economies, such as Lubbock, TX. Lubbock sports incredible job diversity that includes large colleges, hospitals, and Fortune 500 companies. Additionally, it's worth mentioning that Lubbock came in at number seven for the most recession-proof cities in the U.S. as reported by Business Week. Here's something you'll want to read over. It's an excellent article that covers the topic in detail – Lubbock Recognized as Recession-Proof City and Maintained a Strong Texas Rental Market Throughout Pandemic.
Those who would like to secure a rental property when the demand is through the roof, and before property prices rise further, feel free to Schedule a 30-minute complimentary call. We're here to answer all your questions and to set you on the path to becoming financially independent through rental real estate.
Before you go, dive into the following video for more insight on this topic – America is Becoming a Renter Nation:
