Phoenix No. 1 in nation by number of built-to-rent houses
As renters look for a lifestyle change that offers more space and privacy, communities of single-family built-to-rent houses have become the hottest trend in housing. 2021 was a record year for single-family rental home construction, with 6,740 new built-to-rent homes completed. And, the trend is growing rapidly: twice as many homes are now under construction, for a total of nearly 14,000 set to open their doors to renters beginning this year.
Cleverly described by some as “horizontal apartments,” communities of houses built for the sole purpose of renting are becoming the hottest topic in residential living. But, single-family rentals are not a new concept. Although they proliferated in the aftermath of the 2008 housing crisis, this time it’s different. The pandemic created an unprecedented demand among renters for space and privacy, which houses can address much better than apartments.
According to a recent survey of 3,300 renters on rentcafe.com, as many as 78% said they were interested in living in a community of single-family homes. The survey confirmed the rising interest in single-family rentals that began to take shape last year, including on rentcafe.com, where searches for “homes for rent” tripled in 2021 compared to the previous year.
What’s more, the race to build more of this in-demand type of rental is accelerating: In 2021, 6,740 new rental homes in built-to-rent communities were completed — the highest yearly total to date, according to Yardi Matrix data. But, this is just the beginning of a trend we’re bound to see much more of as the pace of construction is set to double beginning this year. Specifically, there are an estimated 14,000 built-to-rent homes under construction in the United States.
Currently, there are about 90,000 existing single-family homes in the United States in nearly 720 such communities designed specifically for renting. They include single-family detached houses, townhomes, duplexes, and even quadruplexes that come with a backyard or a garage — or sometimes both.
It’s easy to see the appeal of built-to-rent homes: the trend combines the financial and leasing flexibility of a rental with the amenities and convenience of a professionally managed property, all while living a single-family home lifestyle. As a result, everyone is interested, according to Shannon Hersker with Walker & Dunlop: “There is a misconception that the majority of renters are Millennials when, in reality, you have everyone — including college students, empty nesters, families with kids, pet owners, and those wanting to downsize,” she said.
Built-to-Rent Communities Present in Both Suburban & Urban Areas
Because they need large lots of land to build on, rental home communities are prevalent in low-density areas, with the majority (61%) located in suburbs. “Undoubtedly, coronavirus has also impacted upon this increased popularity,” said Christopher Michael, architect and founder of archisoup. “Many are now moving out of the cities and apartment living to seek out more space in rural and suburban locations.”
This aligns with our renter survey, which also revealed that besides the main reasons for choosing a single-family rental over an apartment — more space (29%) and more privacy (25%) — these types of rental homes are also attractive for families. More precisely, 19% of respondents believe a single-family rental is more suitable for their family, especially if the community is located in a quiet, family-friendly area in the suburbs.
Mapping the top 100 locations with the most built-to-rent houses reveals that 39% of these communities are located in urban areas, particularly in geographical regions where land availability allows. While they’re more likely to be found in urban settings in the Southwest, they tend to be more present in suburban areas in the Midwest and Northeast
Either way, single-family rentals are filling up fast, with the occupancy rate in 2021 2% higher than apartments (97% compared to 95%) — demonstrating renters’ interest in living in a house. And, Hersker believes the trend of the built-to-rent home was already on the rise: “The pandemic just increased demand at a faster pace,” she said. “People want to live in areas that are less dense, in communities that offer more space.”
Phoenix Ranks as #1 Metro for Built-to-Rent Houses
The Phoenix metro is at the forefront of homes-for-rent development with a total of 6,420 houses in built-to-rent communities. The area is also a leading metro in new apartment construction, making it one of the top coveted areas for renters overall.
Next, Columbus, OH, is the second-most popular metro, with 4,780 homes in built-to-rent communities. On the fast track to becoming one of the country’s most prosperous job hubs, the area surrounding Ohio’s largest city has seen consistent population and employment growth in recent years.
Meanwhile, as a booming job hub and a leading force when it comes to new apartment construction, the Dallas metro is also flourishing in single-family rentals, with the third-highest number of home rentals in the U.S. at 4,290.
Las Vegas Top City for Built-to-Rent Houses
Although most cities don't have the land necessary for sprawled communities, 39% of single-family homes are located in urban areas. Las Vegas has an advantage in that regard, ranking as the #1 city with the most single-family rentals (2,520). Coincidentally, Vegas is also home to the two largest built-to-rent communities in the country.
Houston, TX, has the second-highest number of homes in built-to-rent communities — 1,620. One of the largest cities in the country in terms of surface area, Houston is able to accommodate large residential communities and respond to the high population influx it’s experiencing as one of the most popular destinations for business relocation. Similarly, another Texas city is also among the top markets to invest in rental homes: the city of Dallas (in fifth spot), currently has 1,270 completed rental homes.
Arizona logged five cities in the top 20. The most notable are Tucson and Phoenix — two cities with increasing numbers of built-to-rent projects that tally around 1,300 completed single-family rentals each.
The Largest Built-to-Rent Communities in the U.S.
Increased housing demand has led to increasingly larger communities, resulting in mega-projects that look like whole neighborhoods. As a matter of fact, the average built-to-rent community has about 125 single-family rentals, while some mega-communities can have up to 500 houses and others can be as large as 800 homes. Here are the largest built-to-rent communities in the United States:
Buffalo Highlands and Buffalo Highland used to be known as Buffalo Highland I-VI and Buffalo Highland VII, VIII, IX and X. But now, with 819 rental houses each, the Las Vegas mega-projects form one happy neighborhood on their own. Development for Buffalo Highlands broke ground all the way back in 1988, with the Highland section following suit in 1997.
To the west, Homecoming at the Preserve believes that whatever kind of home you need, they have it. And, with 805 houses for rent, chances are that they really do! What sets this community apart, in particular, is the resort-style living experience, as well as the lifestyle amenities usually associated with an apartment community — such as clubhouses, game rooms, fitness centers and pools.
Another example of an expansive built-to-rent project is the quaint sub-neighborhood of Treviso Gardens. The 644-single-family-home community in Katy, TX, was completed in 2021 and is already 99% occupied, according to Yardi Matrix.
Beyond its potential to become a sizeable force in the rental housing market, built-to-rent houses are also a welcome alternative for those who want to move up from renting an apartment or those who are unable to buy in a highly competitive market, but who are willing to pay more for a rental, Hersker said. “Typically, BTR units are larger than the average apartment, and renters see the value in paying more for increased space and additional storage.” She adds: “Living in a BTR community allows the renter to socialize and share amenities, but also have their own yard and space to entertain.”
Find the top cities with the most single-family rentals in each state by following this link (click on each image for full size).