Build-to-rent homes in the US are more popular than ever, with 2022 seeing a new record in this type of construction. Metros in the south registered the highest levels, led by Phoenix and Dallas. In Florida, hotspots for build-to-rent were Tampa, Jacksonville and Sarasota.
Record number of build-to-rent homes in the US
In 2022, 14,541 build-to-rent homes were completed, the highest on record. The figure represents a 47% increase compared to 2021 and highlights a new trend among American households.
As the image below shows, the growth in this type of construction has been exponential over the last decade. However, it’s since the pandemic that the trend has taken off.
(Source: RentCafé)
And 2023 looks set to register even higher figures. According to RentCafé, there are currently 44,700 build-to-rent homes under construction in the US, three times more than last year.
Reasons for boom
Analysts attribute the surge in build-to-rent homes in the US to several factors:
A shortage of single-family homes
Over the last three years, demand for more space, outdoor and indoor for home offices and schooling, has soared. As a result, supply levels of single-family homes have been at rock-bottom levels.
Listings in some parts of the country have started to rise over the last few months. However, inventory still stands at well below 6 months, the level considered to be a sign of a balanced market. For example, Floridah had 2.7 months' supply of single-family homes in May.
Lack of affordability
US house prices surged in 2020 and have only just shown signs of moderation. Consequently, many households have been priced out of the market, leaving them withno alternative but to rent.
High interest rates
In addition to increasingly expensive homes, would-be buyers have the obstacle of raising interest rates. Although the Fed appears to have halted the steady rise, rates currently sit at around 7%, making mortgages unaffordable for many households.
Southern metros lead the trend
RentCafé looked for hot spots for build-to-rent homes in the US and found that the majority were in the south. Phoenix in Arizona had the highest number, with over 6,000 of this type of property built in the last five years.
Dallas set the record for the most completions during 2022 when 2,800 build-to-rent homes entered the market.
Build-to-rent homes in Florida
RentCafé found that the Sunshine State had three busy metros for this type of construction, Tampa, Jacksonville and Sarasota.
Tampa took 12th position in the ranking, with a 160% increase in single-family rentals over the last five years. In this metro, 60% of the build-to-rent options have entered the market in the last decade. The majority were completed between 2019 and 2022.
Jacksonville ranked 14th in the US, with a 353% surge in build-to-rent properties. In 2022 alone, nearly 900 units joined the rental market, boosting the build-to-rent sector in northern Florida.
(Source: RentCafe)
