Why Build-To-Rent Homes May Be The Solution To Help The Current Housing Market
Build-to-rent homes are being developed now to give additional housing options in a cooling real estate market.
Build-to-rent homes are exactly what they sound like – homes that were built exclusively to rent out. As interest rates continue to climb in a hot housing market, many prospective homeowners find themselves unable to afford to purchase their own home. Adam and Tahnya Gaston, who recently moved to Round Rock, Texas with their dog and baby, found themselves in that exact situation.
The Gastons were able to find a $ 4,000-a-month three-story house to rent in the Austin suburb. The development is filled with other cookie-cutter build-to-rent homes that provide an alternative to a smaller apartment or a 30-year mortgage. As the current housing market continues to provide unfavorable conditions for families, rental-only developments are becoming more commonplace.
The build-to-rent homes development the Gastons moved to in Round Rock is still building more homes, and when completed, the Oaks on Chisholm Trail will have a total of 113 homes. Each home will have its own lawn and two-car garage and all the familiar trimmings of a home but without the financial commitment, maintenance responsibility, and skyrocketing interest rates. Thousands more developments just like Oaks on Chisholm Trail have appeared across the country, appealing to renters who aren’t keen on the apartment lifestyle.
Those unable to pursue homeownership are in luck: build-to-rent homes are becoming widely available across the country. According to an article in the Washington Post, “developers are expected to add 105,000 homes in such communities this year.” By 2025, developers plan on adding 50 percent more.
The build-to-rent home concept isn’t new, and it had already grown in popularity even before the recent real estate slowdown. Now, record-high mortgage rates are making it nearly impossible for families to buy a home, causing a significant shift in demand for rentals. Generations before today’s were more likely to own a home than rent, and most 20 and 30-year-olds today are more likely to rent.
In addition to the financial factors, homeownership has also gone down due to high levels of student debt and a preference for flexibility. Build-to-rent homes have shown to be the perfect solution for families from this generation who have more student loan debt than ever before.
Adam and his family looked into buying a home in Austin but couldn’t justify the prices, especially since only a few years ago, their budget would’ve afforded them a large, beautiful house in the suburbs. That’s where build-to-rent homes came into play.
The slowdown in housing construction has left the United States with a shortage of approximately 5 million single-family homes. Some experts believe that the build-to-rent developments can help bring the housing market back to normal. However, some local housing economists disagree, believing that the new developments are only making homeownership even more out of reach for prospective homeowners.
Homeownership has always been a solid foundation for building wealth. With rent also rising across the country, renters are finding it difficult to save up money for already-overpriced homes. Build-to-rent home developments are a happy medium, allowing Millenials with young families to enjoy the lifestyle previously afforded to the generations before them.
Several of the country’s largest home builders, such as D.R. Horton, are investing billions of dollars in build-to-rent developments. They’ve taken notice of the average millennial’s needs and limitations and have acted accordingly. Nearly 10 percent of the country’s new homes are all build-to-rent.