Build-to-rent houses dominate the market | Immovable
A new study indicates that the Phoenix metro area leads the nation in building rental homes with more on the way, including in Ahwatukee.
“There are currently 6,420 BTR homes in this metro area, making it the most populated area in the United States for this type of housing,” said Adam Graham, industry analyst at Fixr.com, a website which provides guides, comparisons and terms. checklist for renovation, installation and repair projects.
The next two metro areas in the top three nationally for homes to be built – Columbus, Ohio and Dallas, Texas – are relatively far behind Phoenix with 4,780 and 4,290 homes,
Other metropolitan areas with more than 3,000 BTR homes are Houston (3,600), Riverside, CA (3,540), Las Vegas (3,260), and Kansas City Metro (3,170).
Building for rental has been a growing trend in the Valley over the past couple of years.
Blandford Homes’ mammoth Upper Canyon development on 373 acres of former State Trust land along Chandler Boulevard between 19th and 27th Avenues, for example, will include 150 rental townhouses as well as 1,050 traditional single-family homes and 329 apartments . .
The Empire Group in Scottsdale last December unveiled plans for 144 single-family rental homes on 14 acres of Schnepf Farms – Queen Creek’s famed agri-entertainment spot, best known for its fishing festivals and annual pumpkin fest and chile in october.
The Schnepf Farms village is the company’s seventh in the valley and one of 21 projects in a market area stretching from Casa Grande to Prescott.
Fixr.com said construction of single-family rental homes is up 106% nationally so far this year for all of 2021, leading to a 36% increase in rental home construction compared to 2020.
According to data pulled from RentCafe, at least 13,910 SF BTR homes are under construction in the United States and 2022 is seen as a likely breakthrough year in their popularity with real estate developers and investors.
And that’s because soaring home prices and mortgage costs are making it increasingly difficult for first-time buyers to find a home to buy, experts say.
This sector of the housing market “will continue to grow as long as we have an inflated housing market,” said Sarah Cunningham, owner of Ethos Design + Build | Remodel, at fixr.com. “They are designed for long-term renters, but they also create a housing stock that is not designed for homeownership and continues to make it difficult for first-time buyers.”
Hunter Housing Economics, a real estate analytics firm, said more and more young families are turning to rental homes because they want their children to have a safer yard and neighborhood.
Fixr said it interviewed professional remodelers who said more people want patios, decks and balconies, proximity to parks and green spaces, and other amenities they can’t find in resorts. apartments.
Meanwhile, construction for rent also attracts people who would prefer even routine landscaping as well as other maintenance work to be done by someone else so that they can pursue hobbies. more pleasant.
And builders are responding by ensuring that rental units are built to withstand the punishment of everyday life.
“When a BTR builder builds a home, it’s with a lot of attention to durability and ease of maintenance,” said Housing Analytics President Brad Hunter. “This builder (or this builder’s investing/operating partner) knows that this home needs to be able to withstand pet damage, spills, and other accidents.”
“That’s why most of the projects I see in the BTR world feature luxury vinyl flooring, which looks great, and is very scratch resistant and won’t warp if a drink is spilled on it. I Also see home designs that allow maintenance workers to service air conditioning and other HVAC systems through the garage, which is less intrusive for tenants.”
Hunter told fixr that investor demand for BTR projects is “already growing rapidly and soaring mortgage rates have only accelerated growth.”
Forbes quoted Scottsdale land sales expert Greg Vogel as saying that 10% of all land sales in the Valley this year have been to property developers and that trend is likely to increase.
“Rental yields are starting to allow BFR investors to outbid homebuilders,” Forbes reported. “In our research, we have seen single-family rents increase 7-10% per year over the past twelve months in many neighborhoods. Within a given BFR community, rents increase at rates faster than this, especially when one tenant moves out and the next one arrives.
Fixr raised concerns about the trend, citing an analyst who observed that while BTR may be good for investors, it’s not so good for communities.
“It makes it harder for people to get into property,” the analyst said. “When that opportunity is taken away, as it is in communities like mine where the housing stock is already low, it’s harder for people to build personal and generational wealth.”