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The American Dream—for Rent

For those who are not ready to buy a home or remain financially constrained from doing so, renting the American dream is an option to further the path to homeownership.

According to a new report from RentCafe, continuous trend of people are deciding they want the flexible lifestyle of the renter—with no maintenance commitments and costs—and the comfort and privacy offered by living in a house.

In this case, build-to-rent homes are a perfect solution, while high home prices and rising interest rates make them even more appealing to Americans throughout the U.S.

As a result, American developers are building new single-family rentals (SFR) at an impressive pace, according to the report. In 2022, a record-high of 14,541 new homes were completed in one year, up nearly 50% since 2021. The pandemic and its long-term effects—from social distancing to work-from-home—acted as the wind in the sails of this new trend.

After 2020, the number of new build-to-rent homes peaked every year. That’s in contrast to a linear evolution before the pandemic, when there were around 6,000 houses built annually.

Experts predict this type of housing is prepared to take off. Nearly 44,700 homes are underway across the nation, which shows how popular they are becoming. The 97% occupancy level, which is above the 95% occupancy for apartments, further confirms the continuing momentum.

Where are the best places to find a single-family home for rent?

Phoenix and Dallas are the metros where renters will find the largest number of homes for rent, while Charlotte, NC; Atlanta; and Little Rock, AR, saw the most significant increases in single-family rentals in the last five years.

Overall, 2022 was the strongest year on record for the construction of single-family homes for rent with more than 14,500 completed houses. In fact, the number of homes for rent that opened last year represent a 10-year high in eight of the 10 top metro areas for build-to-rent.

During the last two years, projects became larger or denser, with about 130 units on each property. The average size of each home also increased, measuring 1,361 square feet in 2022—up 2.6% compared to the previous year.

Dallas tops the list as the metro with the most single-family rentals completed in 2022 with close to 2,800—a 10-year high. As a matter of fact, the number of build-to-rent homes that opened their doors in the Texas metro last year was more than five times higher than the 500 units completed just one year earlier.

Phoenix comes next with more than 1,500 build-to-rent homes delivered in 20229% fewer than in 2021. Atlanta rounded out the top three with more than 800 single-family homes for rent completed in 2022, also a 10-year high.

The homes-for-rent market picked up speed last year in several popular cities for renters. The number of build-to-rent units completed in 2022 in Charlotte; Charleston, SC; and Austin—all part of RentCafe's ranking—represents a 10-year high for each of the metros.

Austin was named the second fastest growing city in the U.S. by the Kenan Institute of Private Enterprise. That came after the city recorded a 4.3% rise in its GDP in 2022 to $216 billion, following the Bay Area. The Texas capital's booming economy continually attracts talent from other costlier states, particularly California, which feeds the local rental market that can hardly keep up. Other metros that made the top 10 for build-to-rent completions in 2022 are Greenville, SC; Detroit; Myrtle Beach, SC; and Panama City, FL.

Southern metros see most build-to-rent construction in the last five years, with Detroit as the exception

Phoenix is the leading metro when it comes to build-to-rent houses, tripling its number of single-family homes for rent between 2018 and 2022. This means that, out of the more than 8,200 build-to-rent units in the metro, more than 6,000 opened their doors in the last five years.

In Phoenix, the prequel to the trend of build-to-rent homes was the housing crisis of 2008. Institutional investors bought two-thirds of the homes (about 20,000 units) that were no longer owner-occupied after the Great Recession, according to the Urban Institute. Since then, greater Phoenix’s significant population growth—5.8% between 2016 and 2021—and its developing suburbs have created a high demand for single-family rentals.

The second metro on RentCafe's list is Dallas, with a total of 7,800 single-family rentals. Here, the number of new houses for rent more than doubled between 2018 and 2022. This translates to nearly 4,000 units completed within that time frame, more than half of the metro’s single-family rental stock.

Texas is the leading state when it comes to build-to-rent homes, as four Lone Star State metros landed in the top 20 trending metros for single-family rentals. Houston comes in fourth place, followed by Austin (seventh) and San Antonio (eighth). Of the three, Austin saw the highest spike in single-family rentals added between 2018 and 2022—153%, equal to 1,100 homes.

While most of the top metros for build-to-rent units are in the Southeast and the South, Detroit stands as the exception, rounding out the top three. The Midwestern metro nearly doubled its single-family rentals stock in the last five years, with a 96% rise in the number of units.

This means that more than 2,200 houses were added here for a total of nearly 4,600 build-to-rent homes in 2022. With several billion-dollar investments announced in the metro in the coming years—including multiple downtown buildings worth a total of $1.5 billion, to be located close to University of Michigan’s future Detroit Center of Innovation—the need for rentals is poised to remain high.

Florida also claimed two metros in the ranking. In Jacksonville, the number of single-family rentals nearly quadrupled in the last five years, reaching almost 900 units in 2022. This fairly new build-to-rent market saw nearly 80% of its total stock built in the last 10 years, with most projects completed between 2019 and 2022. Further south, Tampa’s evolution is quite similar. The number of single-family rentals in this Sunshine State metro increased by 160% in the last five years, which means it added more than 800 units within this timeframe. In addition, more than 60% of build-to-rent homes in this area opened in the last 10 years.

At the same time, tech hubs Denver, Charlotte, Atlanta, and Salt Lake City also made the top 20 trending metros for single-family rentals. In these areas, job growth, tech talent migration, and an ongoing work-from-home agenda are all fueling demand for more spacious rentals to meet renters’ demand for more elbow room and privacy. Among these, Atlanta stands out by ranking fifth nationally. Here, the number of build-to-rent homes quadrupled in the last five years to exceed 1,800 units.

Southeast regions experience a wave of new SFR markets

Build-to-rent communities are also springing up all around smaller metros in the Southeast. The Myrtle Beach, SC, area is a new entry in our top trending metros for single-family rentals (#16). All of the units in this fresh market were built in the last five years and more than half were completed in 2022.

Other notable markets for new single-family rentals include: Provo, UT (492 units); Raleigh, NC (477); North Port, FL (445); Panama City, FL (407); and Huntsville, AL (385 units).

Phoenix builds most single-family rentals, Texas metros lag behind

The magnitude of the build-to-rent wave is expected to amplify as roughly 44,700 homes are now under construction across the country. At the core of it all is Phoenix with nearly 5,500 single-family homes for rent underway. Dallas and Houston are next with 4,400 and 2,600 units, respectively. Atlanta ranks fourth, with close to 2,200 houses for rent underway, reinforcing its status as a top metro for single-family homes for rent.

Businesses in innovation and technology are thriving in Charlotte, with a $150 million tech hub inaugurated at the end of last year as proof. This vibrant environment draws in new talent, which then echoes into the housing market as well, placing the North Carolina metro fifth in RentCafe's ranking with more than 1,700 units under construction.

Florida's Tampa and Jacksonville are next with 1,400 and 1,300 homes for rent underway. At the same time, neighboring Orlando, FL—one of the nation’s most competitive rental markets—is also building houses for rent to meet increased demand. The metro ranks 11th on our list of metros with the highest number of build-to-rent units under construction with roughly 950 houses.

Nashville, TN, ranks eighth due to its upcoming 1,100 build-to-rent homes. It's followed by Salt Lake City, where SFR construction just crossed the 1,000-unit threshold. Texas metros San Antonio (#10) and Austin (#12) are also on the list, each with more than 900 single-family homes for rent on the way.

Las Vegas occupies the 16th place in our ranking — with roughly 660 homes under construction. That's higher than Sacramento, CA, (at #18 with nearly 640 units underway). With an influx of residents relocating to the California capital—particularly from the Bay Area—this metro is seeing an increase in demand for rental homes. Sacramento also ranks among the state’s hottest markets for renters, which could explain the growing interest for single-family homes.

Finally, Akron, OH—#20 on the list—counts more than 500 build-to-rent homes under construction, capitalizing on the Midwest's newly found appeal to renters. Denver; Riverside, CA; and the Twin Cities are also among the metros that are seeing the most build-to-rent construction.

To read the full report, including more data, charts and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].
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