The U.S. Housing market has been a wild ride for buyers, builders, and investors for the last few years. Now a new group is joining in on this record-setting market: renters. But we’re not talking apartments. Increasingly, people are turning to single-family rental homes. Now these build-to-rent homes make up more than 6% of all new home builds in the U.S.—a number expected to double across the next 10 years.
Welcome to the fastest-growing sector of the American housing market.
Traditionally homeownership was wrapped in the American Dream. That thinking is changing. Now more people—of all ages and incomes—want to focus on flexibility and freedom versus the financial burdens of mortgages and maintenance. But they still want all the benefits having their own home provides.
That leaves builders, property owners, and managers to deliver a unique value proposition. The ones who do it well stand to capitalize on a growing trend. The key is unlocking what single-family renters want in a new home.
While single-family rental homes are becoming more popular across a wide range of income brackets, the median income hovers around $77,000. With a median sale price of $350,000 for homes on the market today, that makes them unaffordable to many in this group. Others simply just do not want to pay the steep prices or are uninterested in owning. Rental homes deliver a good bang for the buck. They typically afford families a modern place to live complete with more space and a yard. Home maintenance and appliances stay out of renter budgets allowing them to create more predictable monthly expenses. Nominal fees can take care of annoying tasks like landscaping, lawncare, and trash removal. While these homes often cost more than traditional multi-family unit rentals, the value is worth not taking on a 15- or 30-year mortgage.
On the topic of multi-year mortgages, single-family home renters want flexibility—in where they live, how long they live there, and the terms of the lease. The pandemic and remote work revolution opened the door to people living and working anywhere. Single-family rental homes allow people to try new places, jobs, or school districts without being forced to put down roots. That aligns with data that shows today’s workers will have 12 to 15 different jobs in their lifetime. Renting allows those jobs to be anywhere. As a result, research indicates that more than 60% of renters are willing to pay extra for flexible lease options.
The single-family rental home boom now is creating entire neighborhoods of renters. That generates economies of scale in the features these communities can provide. Pools, staffed fitness centers, and parks are a few of the popular options. Increasingly, families want daycare centers, pharmacies, restaurants, and trails nearby. Features once only available in pricy neighborhoods now are becoming accessible in single-family rental home communities. They serve as a big draw for attracting and retaining renters.
Perhaps the biggest draw of single-family rental homes is the aspect of hassle-free living. That’s certainly true for baby boomers. This generation has the wealth to own a home, yet they are selling and starting to rent. The move gets them away from strenuous home upkeep giving them more time to enjoy retirement.
Millennials, a generation marked by ubiquitous technology, love convenience and affordability. They want a low-maintenance lifestyle. Having already endured three financial crises in their short lifetimes, they are prone to rent. Single-family rental homes ease their financial fears while transferring maintenance to property owners and managers.
Data suggests that Gen Z, the generation just starting to enter the housing market, feels largely the same. Plus, this group—managing large student loans and credit card debt—lacks the financial means to purchase a home. Renting gives them one less financial burden to worry about.
So, for renters to live hassle-free, that means builders and property owners must take on the burden when it comes to home upkeep and maintenance. However, PWSC’s home warranty designed specifically for build-to-rent homes diminishes the hassle here too.
PWSC’s HomePRO warranty covers the home’s systems, appliances, and even major structural components with $0 deductible, relieving both builders and property owners from many first-year service calls and variable costs. The warranty also benefits property managers by responding to system and appliance service requests with its nationwide network of top quality vendors. The result is happy renters, ready to stick around, helping everyone—from builders to investors to owners—earn a solid return on investment.