Here’s How Builders Are Still Offering the American Dream
With the housing market down and the percentage of people of buying homes being way down, builders are making dreams come true by building homes for rent.
According to CNN, build-for-rent communities might have more in common with an apartment building than the typical single-family rental, said Ben Miller, CEO of Fundrise, which owns and operates 50 build-for-rent communities with 5,000 units and is in the process of building 6,000 more.
“When people think of build for rent, they think of a house,” Miller said. “But that house is in a community of 100 to 200 homes. You want it to be like a multifamily apartment building: People like having a fitness center, pool and amenities, but with space for their kids and pets.”
The single-family rental segment of the housing market is dominated by “mom-and-pop” investors, some of whom own as many as two dozen homes or just a few properties.
Over the past few years, however, large investment groups — like Home Partners of America or Invitation Homes — have gotten into buying up existing single-family homes to rent. This ramped up significantly during the pandemic as the value of real estate escalated.
Some communities became concerned about the increasing share of entry-level housing stock that was being taken out of the purchase market and turned into single-family rentals, further limiting supply and running up prices.
Research from the Urban Institute shows that while the average single-family rental home was built in 1979 and is scattered throughout a community, BFR homes are newly built in a planned community of dozens of single-family rental homes that may look indistinguishable from a neighborhood of new construction homes for sale. Rather than being sold to homeowners, BFR properties are typically owned and operated by builders, institutional investors, or partnerships of the two.
