In its annual Built-to-Rent Report, RentCafe's analysis of Yardi Matrix data shows an exponential increase in build-for-rent (BFR) home completion. Today, there are 44,700 rental homes in the pipeline—triple the amount of houses completed in 2022.
Last year, the U.S. saw a record-breaking year for BFR homes. In the highest yearly total to date, 2022 saw a completion of over 14,500 BFR houses. This is a 47% increase from 2021 that had less than 10,000 homes built.
Prior to 2020, there was an average of only 6,000 BFR homes built annually. Since the pandemic, that number has increased every year. But why are they so popular now?
Build-For-Rent Increase in Popularity
According to RentCafe, one reason could be the attractive occupancy rate of BFR homes. Single-family rentals have a 97% occupancy level, compared to traditional apartments' 95 percent. Another reason is, of course, due to the COVID-19 pandemic. Tenants and home owners alike desired more room in their dwellings, either for distancing purposes or simple leisure.
In fact, the size of BFR homes has also been increasing. They averaged at 1,361 square feet, four bedrooms, in 2022—up 2.6% from 2021.
Where Are Build-For-Rent Homes Being Built Most?
Phoenix, Ariz., leads the market with 5,500 homes under construction in 2023, followed by Dallas (4,400 units), and Houston, Texas (2,600 units). Last year, in 2022, Dallas led the charge with the most BFR completions in the country (2,773). These Southern metros are where BFR homes are being built the most, with Detroit, Mich., as the exception.
Based on yearly averages and trends, RentCafe has compiled a list of metros that have made the most growth in the past few years—metros that are "hot" for BFR. For example, Phoenix leads this list as well with 6,000 of its BFR units being built in the last five years. This means that the metro has increased its stock of single-family rental homes by 280% since 2017.
Dallas comes behind Phoenix again, doubling its BFR homes stock (currently, 7,843 units) from 2017 (3,888 units). Detroit falls just below with a 96% increase in units, followed by Houston (60%) which delivered 1,875 new units in the last five years.
'Small' But Mighty Metros
However, there are some metros that have seen exceptional growth in BFR stock since 2017, but don't necessarily have the largest stock country-wide. These budding cities include Charlotte, N.C., that had 621% more BFR homes in 2022 (1,333 units) than in 2017 (185 units). Atlanta, Ga., increased its inventory by 380 percent, going from having 382 single-family rentals in 2017 to 1,834 rentals in 2022.
Jacksonville, Fla., comes behind with a stock increase of 353 percent, followed by Phoenix (280%), Greenville, S.C. (265%), and Tampa, Fla. (156%).
Overall
RentCafe predicts the biggest boom in single-family rentals will be in Phoenix and Texas metros.
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