For the past several years, investors have flooded the build-to-rent (BTR) market as priced-out would-be homebuyers made their way into the rental sector for more affordable housing options, but according to Forbes, many now fear that this booming segment is becoming too crowded. While rent growth is still in the range of 8% to 10% gains on a year-over-year basis, slower demand due to rising inflation and recession fears could lead to a sharp slowdown of rent growth in 2023.
The long-term outlook for 2024 and beyond reveals yet another BTR boom, especially as more Millennials seek out family-friendly housing options during a period of slower income growth while the economy softens.
Income growth is not going to stay at 11%-12% in 2023/2024 perhaps, but 8%-10% earnings growth is not unreasonable for people in their 30s to expect. That will support rent growth at single-family rental communities. A recent analysis by RealPage showed that market-rate renters are currently only spending 23% of their income on rent, which is well below the 30-33% that is considered a ceiling. There seems to be room to run, at least after the economy gets past this slump and demand starts roaring again.
Advertisement
Related Stories
Sales + Marketing Trends
Brand Loyalty and Why Builders Should Think Like a Hospitality Brand
Whether its offering that personal touch or incorporating experiences into amenity use, home builders have something to learn from the hospitality industry
Market Data + Trends
Hottest Markets for Rental Activity in February
Looking at February's rental activity, the West continued to be the most desirable region for apartment hunters for the second month in a row, with the South close behind
Build to Rent
Yes, Rents Are Cooling, But How Much Varies by Market
Excess supply has helped to slow rent increases in some markets, and rent growth is moderating across a wider range of markets than in previous years, but affordability concerns persist
