A growing number of single-family homes are being built with the intention to rent. While the numbers make up a small portion of the market, the single-family built-to-rent market is on the rise, according to Robert Dietz, chief economist of the National Association of Home Builders.
Construction starts for built-to-rent homes totaled 37,000 over the last four quarters, compared to 33,000 over the prior four quarters. On a one-year moving average basis, the built-to-rent market stands at 4.3 percent of all single-family starts as of the first quarter. In the first quarter of 2018, there were 7,000 single-family built-to-rent starts. This type of single-family construction excludes homes that are sold to another party for rental purposes and only includes homes built and held for rental purposes.
The Great Recession and the declines in the homeownership rate spurred a greater share of built-to-rent homes, Dietz notes on the builder association’s blog, Eye on Housing. However, “despite the current elevated market concentration, the total number of single-family starts built-for-rent remains low in terms of the total size of the building market,” he notes.
From 2005 to 2015, 56 percent of the gains in the rental housing stock were due to increases of for-rent single-family homes. The share of single-family homes built specifically for renting out is significantly smaller than the single-family home portion of the rental housing stock, which was measured most recently at 35 percent by the 2015 American Community Survey.
“As homes age, they are more likely to be rented,” Dietz writes.
Source: “Single-Family Built-for-Rent Construction,” National Association of Home Builders’ Eye on Housing blog (May 22, 2018)
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