Why Build-to-Rent Developments May Be Making Homeownership More Elusive
First-time homebuyers are struggling to find and afford available starter homes in a high-cost, fast-paced housing market, and rather than waiting for affordability to improve, many are leasing homes in rental-only developments, The Washington Post reports. By the end of the year, builders expect to add 105,000 new homes to build-to-rent developments nationwide, and by 2050, total supply could rise by another 50%.
As decades-high mortgage rates make home purchases unattainable for a growing number of Americans, rental demand is on the rise, especially among younger generations without an equity cushion. While helpful in the short term, experts worry that build-to-rent communities are actually pushing homeownership further out of reach by making it harder for would-be buyers to save for a down payment.
But critics, including local housing economists, say build-to-rent arrangements are exacerbating long-simmering inequalities by replacing entry-level homes with rentals that make homeownership even more elusive.
Buying a home has long been one of the most direct and reliable paths to building wealth. But when renters face constantly rising rents, it becomes much harder to save for a down payment to buy a home. Data shows that renters spend much more of their incomes on housing than homeowners do, in part because rents tend to rise every year.