In a changing housing landscape, many Americans are opting to rent rather than buy homes, whether that be because of inflation hitting mortgage rates or stagnating wages. This trend has led to a surge in the construction of built-to-rent homes, with developers across the country meeting the growing demand for single-family rentals.
According to a recent report by Yardi, a record-breaking 14,541 new built-to-rent homes were completed in 2022, marking a substantial 47% increase from the previous year. This surge in construction can be attributed to the lasting effects of Covid-19, including the rise of remote work and the need for more space to accommodate social distancing measures.
The report estimates 44,700 built-to-rent homes are currently under construction in cities across the US. These homes boast an impressive 97% occupancy rate, surpassing the 95% occupancy rate typically seen in apartments.
Top cities for built-to-rent homes
Among the top cities for built-to-rent construction, Phoenix and Dallas lead the pack. Phoenix witnessed a tripling of its single-family rental market between 2018 and 2022, with more than 6,000 new built-to-rent units opening their doors during this period. Dallas, on the other hand, experienced a doubling of new houses for rent, with nearly 4,000 units completed between 2018 and 2022.
In fact, Texas emerged as a prominent player in the built-to-rent market, with Houston, Austin and San Antonio also making it to the top 20 trending cities. Austin, in particular, saw a significant 153% spike in single-family rentals added between 2018 and 2022, amounting to 1,100 new homes.
While the majority of built-to-rent activity is concentrated in the south-east and the southern states, Detroit is an exception. The city nearly doubled its single-family rentals stock in the past five years, adding over 2,200 homes in 2022 alone. With substantial investments pouring into Detroit in the coming years, the demand for rentals is expected to remain high.
Other cities making the top 20 list for built-to-rent construction include tech hubs like Denver, Charlotte, Atlanta and Salt Lake City, where job growth, tech talent migration, and the ongoing work-from-home culture contribute to the demand for more spacious rental options.
Smaller cities and metros in the south-east are also experiencing a surge in built-to-rent communities. For instance, Myrtle Beach, South Carolina, witnessed the construction of all its units within the past five years, with over half of them completed in 2022. Provo, Utah; Raleigh, North Carolina; and North Port, Florida, are also emerging markets for new single-family rentals.