Build-to-rent homes may be the newest, most exciting trend in real estate at the moment, but this development was not an overnight success. After years of hovering around the same number of completions, the pandemic brought about the switch to work from home and hybrid work, forcing renters everywhere to reconsider their need for space.
Add to that the steep rise in home prices and it’s no wonder renters, and especially young renters, choose to extend their lease rather than start saving for a down payment.
In 2016, the number of completed single-family rentals doubled compared to the previous year, and that was the first significant jump. Then, for the next four years, the number of completions hovered around 6,000. It was 2020 that broke the ceiling again: The number of completed build-to-rent homes reached 7,676, and it’s been steadily and significantly growing every year since.
With almost 27,500 completions, 2023 is holding the record so far, but it looks like 2024 might just blow past that: There are 45,400 single-family rentals under construction right now, with many of them coming online this year.
This accelerated growth comes as a response to increasing demand, especially following the pandemic and now the adverse market conditions sidelining more and more potential buyers. The analysis revealed that, aside from the record number of completions from 2023, an impressive 41% of the total number of build-to-rent homes were completed in the last five years.
And it's no wonder renters are increasingly opting for single-family homes for rent. Aside from being much more spacious, they are new builds, and this comes with its own set of perks: modern, better-quality materials, modern layouts, state-of-the-art appliances and in-demand amenities and even luxurious features and finishes.
This is mostly due to the fact that single-family rental communities are rather new in the housing market space. In fact, nearly half of the entire single-family rental stock came online in the last five years. And Phoenix takes the top spot again, meaning Arizona's largest metro isn't just 2023's leading market for single-family rental completions, but it's been leading for years now. According to Rentcafe's analysis:
"When it comes to the metros with the largest numbers of new houses for rent that were built in the last five years, Phoenix was again at the top with more than 9,300 units. Specifically, the Valley managed to quadruple its supply between 2019 and 2023: Close to 80% of the total number of houses for rent in Phoenix were added in this timeframe."
Texas had four metros in the top 20 rankings. The stock of single-family rentals in Dallas grew with over 6,500 single-family homes for rent built in the last five years, representing 62% of all rental homes in the area. Following Dallas, the number of houses for rent in Houston expanded with 2,400 units in the last five years, while single-family rentals in Austin jumped with 1,700 units. San Antonio came in ninth with 1,300 rental houses constructed between 2019 and 2023.
Atlanta and Charlotte also stood out for their significant increases in build-to-rent supply. Ranked third, the stock of houses for rent in Atlanta increased sevenfold in the last five years, reaching nearly 4,100 units. Charlotte, ranked sixth, experienced a dramatic rise from just 185 units to over 2,200. In other words, 92% of the single-family rental homes in Charlotte were built between 2019 and 2023.
Some of the largest California and Florida metros also featured prominently in our rankings. Closing the top 10, the stock of houses for rent in Jacksonville, FL, added nearly 1,300 single-family homes for rent since 2019. Tampa tripled its build-to-rent houses, adding 1,100 units in the same period. On the West Coast, Riverside, CA, completed over 1,000 rental houses in the last five years, bringing its total supply to more than 4,400 units.
And the future is looking bright for single-family homes for rent, especially in the metros that have already established their supremacy in this sector: Of the nearly 45,500 houses for rent under construction, the top five metros with the largest numbers of units underway — Phoenix, Dallas, Houston, Huntsville and Charlotte — account for half of the total volume. According to Rentcafe's report:
"Phoenix — the largest build-to-rent market in the country — will add more than 7,200 new houses for rent to its current portfolio of 12,400 units, further solidifying its status. Similarly, Texas metros Dallas (#2) and Houston (#3) are working on 6,500 and 4,800 new single-family homes for rent, respectively, by 2026. These will pile upon the current 15,600 units in the Lone Star State — the state with the most significant build-to-rent supply."
Point2, a division of Yardi Systems Inc., covers real estate trends and news. Point2 studies are based on internal data, public records, governmental sources, online research and other reliable third-party agencies.
