The surge in built-for-rent single-family homes – many with corporate ownership that resembles multifamily housing – have experts split on the long-term housing implications of this trend, according to a report from Apartment List.
“Single-family homes account for roughly two-thirds of the nation’s housing stock, and the majority are occupied by the families that own them. But a sizable share – 16.6 percent – are rented instead, and recent trends in construction data suggest that these single-family rentals will become an increasingly popular housing option in the years to come,” Rob Warnock writes in the Apartment List report.
Warnock writes that single-family rentals are typically operated by a mom-and-pop landlord or a small institutional investor. But the new model that is becoming increasingly common is the “built-for-rent” (BFR) community: a large-scale development of single-family homes that are designed for renter occupancy from the start. BFRs borrow some features of multifamily housing, like professional leasing offices, on-site property management, and community amenities, and are marketed as a middle-ground between renting and homeownership.
Proponents of built-for rent argue:
- Single-family rentals allow greater financial flexibility and access to single-family neighborhoods, and that the surge in built-for-rent communities is a natural response to demographic shifts, particularly a large generation of millennials who are increasingly starting families, working from home, and valuing the extra space that comes with suburban living.
Detractors of built-for-rent argue:
- Institutional investors tend to buy homes at lower price points, further locking out families from buying starter homes that are already in short supplyand concentrating the equity gains of homeownership in corporate ownership instead of people.
Conclusion
“In any case, large-scale investor involvement in the single-family sector remains nascent and will surely draw the attention of policymakers in coming years as housing affordability remains a top-of-mind issue for many American households,” Warnock writes.
