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Built-For-Rent Market Expected to Ease in 2023, but Another Boom Is Likely in 2024, Experts Say

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Built-For-Rent Market Expected to Ease in 2023, but Another Boom Is Likely in 2024, Experts Say

The built-for-rent (BFR) market grew exponentially throughout the pandemic, but as demand cools amid fears of a 2023 recession, BFR developers are pulling back


January 19, 2023
Row of colorful single-family houses
Image: Stock.adobe.com

For the past several years, investors have flooded the built-for-rent (BFR) 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%-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 BFR 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.

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