As single-family homes become increasingly difficult for buyers to snag with low supply and tight competition, single-family rental properties are taking over market demand. About 100,000 new construction projects are for built-for-rent homes this year thanks to growing investor interest, Realtor.com reports.
New demand, however, is also raising land prices and creating frenzied competition for a low supply of available lots. Land values are expected to continue rising, but many deep-pocketed investors are not yet deterred.
Close to 100,000 built-to-rent homes will have started construction this year, according to estimates from Brad Hunter, founder of the Hunter Housing Economics consulting firm. Investors have poured about $30 billion in debt and equity into the sector in 2021, with many billions more in future commitments, Mr. Hunter said.
Traditional home builders like Lennar Corp. and D.R. Horton Inc. have made building rental houses a major component of their business. Giant investment firms like KKR & Co. and Blackstone Group are also piling up cash to add already-built rental houses to their portfolios.
Some analysts and builders are starting to believe the breakneck pace of growth in the sector is unsustainable. Investors are stepping over each other in the Sunbelt markets like Phoenix, analysts and builders say, risking a supply glut. Land sellers are raising their asking prices.
PB Topical Ref
