Research Corner: Build-to-Rent

In CML’s last newsletter, we discussed the trajectory of investor-owned housing in light of a Jan. 20 executive order. One notable exception outlined in the executive order is corporate ownership of Build-to-Rent developments.

This new but quickly growing subset of the housing market consists of communities of single-family homes solely for rent. These communities are complete with amenities like pools and parks and are professionally managed and maintained.

The presence of Wall Street in the housing market notably increased following the subprime mortgage crisis in 2007. Investors had the resources to purchase single-family homes, allowing households to rent in the neighborhoods where a home’s purchase price might be unattainable.

Today, with more than 80% of Colorado renters priced out of homeownership, the demand for rental opportunities doesn’t appear to be going anywhere. Research suggests that Millennials are driving this demand as their households grow, and high home prices keep them out of homeownership.

Since 2012, developers have constructed more than 321,000 build-to-rent homes in the U.S. Of these units, more than 240,000, or 75%, was built in the last five years. These communities are concentrated along the Sunbelt and Southeastern U.S., while the Denver Metro holds the 9^th greatest share of BTR units in the country.