Some builders are redefining the path to homeownership through new detached rental products. According to a post on the National Association of Home Builders' (NAHB's) Best in American Living blog, renting by choice–instead of owning outright–is becoming increasingly popular among millennials.
The blog said that this was where newly constructed built for-rent single-family homes came into the picture. These homes, according to the blog, present millennials "with a terrific opportunity to live the American dream–without the additional responsibilities and stress of homeownership."
The blog indicated that one of the key reasons for the rise of these built-for-rent homes was diminishing affordability.
The post, written by BSB Design, said that transitioning from a multifamily property to a single-family home was a "move-up" solution for families that desired "to have the flexibility to travel, live a low maintenance lifestyle, or avoid financial burdens."
Additionally, single-family rental homes offered advantages like a backyard as well as enhanced privacy without the expenses associated with homeownership like mortgages, down payment, or maintenance. "As rentals, these single-family products use high-quality interior finishes and materials to mitigate potential damage, and those finishes just feel more luxurious in a detached product," said Rick Henry, Senior Principal of BSB Design in the blog. "For young families looking to grow, single-family rentals often offer more space."
Citing a survey by John Burns Real Estate Consulting, the blog indicated that 65% of single-family rentals offer three or more bedrooms compared to 11% of apartments.
“The statistics also illustrate myriad benefits for builders, developers and property managers,” Henry observed. “First, diversifying product offerings is always a good thing, especially with waning single-family sales numbers of late. Developers appreciate the market penetration these rental homes achieve, allowing them to target younger newlyweds, families and even retirees. And finally, with a lower turnover rate for tenants compared to traditional multifamily rentals, property managers can earn premium rents.”