With nearly 111,000 single-family rentals (SFR) under construction in 613 communities across the country, the build-to-rent (BTR) market is growing strongly as inventory is set to expand by 53.5%. Occupancy levels are also strong at 95%, according to a market analysis by Point2Homes.com.
Driven by a favorable job market, Texas is the most robust BTR state, with 21,812 houses for rent in different stages of the construction process, the report said. Arizona and Florida each have 14,000 single-family rentals in the pipeline, and North Carolina is anticipating more than 12,000 new units. Georgia rounds out the top 5 BTR states, all of which are expected to grow their inventory of single-family homes for rent by at least 50%.
Coastal states and particularly urban hubs have been hot spots for BTR demand, but developers have begun to extend their focus beyond central business districts into suburban areas, the report said.
“The pandemic created both the need and the conditions for more spacious rentals, and developers jumped at the opportunity to build bigger house rentals — managing to tick the affordability box by extending further in the metro,” said the report.
Nearly all of Arizona’s under-construction single-family rentals are located in the Phoenix metro, making it the most ambitious metro-level market in the segment.
“Arizona’s capital and most populous city is home to four Fortune 500 companies and its active top industries – real estate; finance and insurance; and manufacturing – ensure that the area remains attractive to residents and newcomers alike,” said the report.
Dallas trails Phoenix with 8,470 SFR in various stages of development, the report found. Other Texas metros are drawing strong activity in the market. This includes Houston with 4,613 units, Austin with 4,313 units and San Antonio with nearly 3,000 new houses under construction. Texas is popular with residents and people relocating because it does not have a state income tax but it also boasts a favorable economy and job market and offers more affordable housing.
Other metros that are hot spots for SFR construction are Atlanta – with 43 new communities, encompassing 6,885 new homes for rent – as well as Charlotte, Orlando, Raleigh and Huntsville, all of which have between 2,000 and 5,368 units under construction.