There’s no question that the housing market across the United States is as hot if not hotter than it has ever been. Rising costs of construction coupled with low inventory available for purchase has continued to drive up prices at a greater rate than at any point that I can remember. Pair these factors with the country coming out of a pandemic and you have a whirlwind of a market that most people can’t seem to get into. So what does one do when they need the extra space of a home but can’t seem to save for a down payment or flat out can’t afford a home in their market? That is where the built for rent development model that is sprouting up in major markets all over the country comes into play.
What are built for rent homes?
These are homes that are built with the sole intent of renting them out instead of listing them for sale. They are initially developed with the intent that the entire development will be managed like a multi-family apartment building. Depending on the developer these communities may be platted so each house has their own property, where as some are developed on one lot and managed like a “horizontal multi-family” site. Developments such as these are not new but until recent, have largely been kept to specific areas with smaller developers making an impact on a local level. Over the last several years however, some of the larger players have begun to make a splash into this sector, making this a much more viable option on a grander scale.
Home prices are skyrocketing right now all across the country and if that wasn’t bad enough, homes are increasingly selling for above the list price. I purchased my first home last year and was out bid 6 times before landing the house I ended up buying. In my last instance of being out bid, I offered $40k over list and did not even make the final cut to be considered. A local news station ran a story where a couple spoke about offering $100k over list but was still out bid by another $100k. It’s no wonder that in markets like Denver some buyers don’t even want the stress of looking for a home, because if you aren’t ready to make a decision within 24 hours or less you might not as well be even looking to begin with. For first time home buyers things become a little more out of range as each week goes by because as the home values go up so does the amount needed for a down payment.
So Who are the Targeted Demographics for Built For Rent Homes?
The first group and I believe the largest, which I am a part of, are Millennials. The majority of millennials will fall under the first time home buyer group. The difficulty of saving for a down payment when prices are at an all-time high means buying a home just doesn’t make a lot of sense. Add in the fact that the average college student will graduate with some level of student loans and very likely has a running balance on their credit cards means that dream of homeownership is that much more out of reach. Even those that do have the means of entering the housing market may not want to throw all of the money they have spent many years saving all into a house. They may like to have the comfort of an emergency fund and the flexibility of not feeling burdened by a mortgage. After all I believe Millennials stray from the Baby Boomer population in that they value experiences as much, if not more, than tangible items (see the rise of the social media influencer)
Other demographics include Empty Nesters, single parent families and single professionals. Empty Nesters are ready to downsize but are not ready for the small scale apartment living. Single parent families need the extra space but don’t have the luxury of a second income to help generate the extra money to afford a mortgage. Single professionals, after working in the COVID era, have realized that more space is needed after working from home. In some instances, all will receive and enjoy the amenities of an apartment (possible pool, maintenance and some landscaping) but the freedom and privacy of a home. There are lots of reasons to turn to rental homes over for purchase homes.
(Some houses done with AMH)
Who is Developing Built for Rent Homes?
The demand for these types of houses is certainly there and on the rise. The housing market across the US is in desperate need for additional and affordable housing. EVstudio is lucky to work with national developer American Homes 4 Rent (AM4H) to help fill the need. Currently EVstudio has worked with them on 8 developments totaling 333 homes spread between Colorado, Arizona and Washington. We are hoping this is just the tip of the iceberg. Both parties realize the need and are positioned to make an impact in a sector that really needs the help. To read more about affordable housing projects that EVstudio has worked on please visit this link Affordable Housing – EVstudio.