Single-family rentals continue to grow in BTR communities

Single-family rentals continue to grow in BTR communities 0 qpurcell Mon, 03/04/2024 - 12:25 Multifamily Housing Single-family rentals are continuing to grow in built-to-rent communities. Both rent and occupancy growth have been strong in recent months while remaining a financially viable option for renters. Quinn Purcell, Managing Editor The Yardi Matrix single-family rental (SFR) report gives an overview of the growing SFR industry, including four of the biggest demand drivers and development trends. MFPRO+ Research Multifamily Housing Apartments Designers Industry Research Interior Architecture Market Data The Single-Family Rentals in Build-to-Rent Communities report by Yardi Matrix shares an update of the SFR market in 2024. Overall, single-family rentals are continuing to grow in built-to-rent communities. Both rent and occupancy growth have been strong in recent months while remaining a financially viable option for renters.Over two-thirds of the top 30 metros have higher occupancy rates from single-family rentals in BTR communities than other multifamily assets.4 Biggest Demand Drivers for Single-Family RentalsBut aside from price, what’s driving the demand? Four of the biggest demand drivers for single-family rentals are work-from-home professionals, household growth, the declining affordability of homeownership, and the demographics of Millennials and blue-collar workers.1. Renters working from homeBecause more than half (52%) of full-time workers are now returning back to the office, hybrid work is becoming the norm. Single-family rentals are more accommodating to this shifting demographic than traditional apartments; SFR offers a quieter environment and more space inside the home for the hybrid worker.2. Household formation growth during the pandemicDemand is also driven by household formation growth during the pandemic as a result of: Employment/wage growth.Stimulus payments.Increased savings.3. Declining homebuying affordabilityAccording to the Yardi Matrix report, 61% of renters in the largest metros are priced out of homebuying. The average home mortgage payment reached $2,547 at the end of 2023. Compare this to the average rent of $1,734 and renting looks like the better deal.As the affordability of buying a home decreases, single-family rentals are prime for Millennials and blue-collar workers who would like to buy a house, but can’t.4. Specific demographicsThose averaging a salary of $60,000 to $70,000 a year, individuals aged 24 to 40, and Millennials/blue-collar workers are largely driving the demand for single-family rentals in built-to-rent communities.SFR development trends indicate that flexible designs and lot size by location are based on consumer preferences. For example, young singles and couples prefer pet-friendly units, while young families prefer large common areas.RELATED: Multifamily rent remains flat at $1,710 in JanuaryDevelopment TrendsThe four biggest single-family rental development trends as of 2024 include:Amenities. On-site maintenance and community areas are the most popular. Better parking, storage, privacy, and yard space is also highly desired.Smart home technology. This has become a “must” and will likely be standard soon, according to Yardi. Developers should plan for future demand such as electric vehicle charging in garages.Homes designed for frequent moving. Single-family rentals are using resilient materials like laminate faux wood flooring to maintain a durable, sleek look. Units are designed with wider hallways to accommodate the moving of furniture in and out of the home.Flexibility. Target demographics and location influence the design of build-to-rent communities. While younger renters would prefer pet-friendly units and large common areas, older singles and couples prefer an attached garage.Click here to view the full Yardi Matrix Single-Family Rentals in Build-to-Rent Communities report.