The shortage of available housing on the market is causing single-family rental companies (SFRs) to turn to builders for new inventory, and the rise of "built-to-rent" housing.
Built-to-rent single-family homes are not a new phenomenon. In the 1980s and '90s, this sector typically had between 30,000 to 40,000 new units per year. Today, this housing has regained that level with about 30,000 units over a 12-month period, Curbed reports. Yet, writes data journalist Jeff Andrews, it remains unclear how many homes SFRs are buying from builders, as these purchases don't require disclosure. NAHB chief economist Robert Dietz insists that most SFRs are "mom-and-pop"-owned, yet companies like Invitation Homes, American Homes 4 Rent, and Tricon American Homes all see this market segment as integral to their growth strategy. Indeed, American Homes 4 Rent is now building its own homes to add to existing rental inventory.
While the scale of built-to-rent activity is still relatively small and mostly casual, there are already signs that more formal partnerships or mergers between SFR companies and home builders are on the horizon. There are also new companies that build entire single-family subdivisions with the express purpose of renting the units themselves. “I think you can just read the tea leaves and see that there’s definitely relationships emerging in the industry,” said Rick Palacios, Jr., director of research at John Burns Real Estate Consulting.