Wall Street’s $40 billion investment in build-to-rent.
Build-to-rent single-family homes and apartment complexes started primarily as a strategy employed by builders and real estate developers has grown into a multi-billion-dollar investment strategy, super-charged by large institutional investors and publicly traded REITs.
Economics is driving consumer behavior. The average U.S. home price hit $287,148 in May 2021, a 14% increase from May 2020. Rents are up 11% increase year to year That’s still a more affordable jump than housing prices.
Household incomes aren’t coming anywhere near keeping pace with rising home prices. According to the United States Department of Housing and Urban Development, the average household income in 2021 will be $79,900, up just 2.4% from 2020. Quickly escalating home prices combined with modest income increases are squeezing people out of the market.
Millennials Continue To Drive Build-To-Rent
And, that’s where build-to-rent can hit its sweet spot: the intersection of desire for a home and economic reality.. In fact, many rental customers are willing to pay a premium of about 10-20% over local market rental rates for the privilege of living in a new home. Why? Developers and investors need to understand that they are gravitating to areas with good schools, recreational opportunities and good restaurants, bars and entertainment options.
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