The relatively new sector of build-to-rent housing is well-positioned for great success this year due to renter and homeowners’ changing needs amid the pandemic and the sector’s broad appeal. These communities of detached single-family rental homes offer professionally managed, high-quality homes with common amenities, but without the HOA costs. According to Forbes, the number of renters is on the rise as well, and this option can appeal to seniors, singles, and families alike, especially as home prices increase. While investors are funneling billions into this new sector, Forbes says it remains in its infancy, and opportunities remain.
BTR is especially well positioned for success in 2021 due to the coronavirus pandemic, which has driven apartment renters in cities to seek suburban single-family homes. According to an October 2020 survey completed by UpWork, as many as 23 million people in the U.S. are planning on moving away from large metro areas to suburban areas with lower costs of living in the coming months because they can now work remotely. Stand-alone homes offer a much more spacious and comfortable living experience than apartments and are thus highly appealing to potential renters in 2021, given that so many renters are working from home and therefore spending an increased amount of time at home.
Even before 2020, the build-to-rent asset class was already experiencing significant growth. Broadly speaking, renting is on the rise. Workers are increasingly transient and don’t want the commitment that comes with homeownership. Homes are becoming more expensive at the same time that wage growth for working-class people has stagnated, forcing much of middle-class America to pursue short-term and long-term rentals instead of homeownership. These factors, in tandem with the coronavirus pandemic, have created a perfect storm for the BTR asset class to make waves in the multifamily space this year.