By Bill Hethcock – Senior Reporter, Dallas Business Journal
Dallas-Fort Worth leads the nation in build-to-rent home construction even as demand for the asset type nationally shows some signs of waning.
Build-to-rent homes constructed nationwide reached an all-time high of 14,541 units in 2022, and three times as many homes are currently underway, according to a new report by RentCafe.
DFW posted the highest number of build-to rent homes completed in 2022, with 2,773 units. That’s a massive 441% increase year over year and a 10-year peak, according to the report.
North Texas’ build-to-rent homes more than doubled in just five years, surging by 102%. More precisely, 3,955 units were added between 2017 and 2022, leading to a supply of 7,843 units throughout DFW – the second largest supply in the nation.
An additional 4,350 BTR units are now under construction in Dallas-Fort Worth, which is the second largest number of upcoming homes for rent in the country, according to the analysis by RentCafe, part of Santa Barbara, California-based Yardi Systems Inc.
Demand continues to be strong in North Texas for build-to-rent homes, said Tony Ruggeri, co-CEO of Republic Property Group. Republic has about 600 homes that will be rentals under construction in Dallas-Fort Worth and is set to start construction in September on another 199 in a standalone community next to its big Light Farms masterplanned community in Celina.
“In the masterplanned community space, which has been our focus for generations, affordability in Dallas-Fort Worth is just a challenge and that’s not going to change in the foreseeable future,” Ruggeri said. “What we really like about the build-to-rent is it’s a new product that we can insert between multifamily and for-sale housing to add diversity to the masterplanned communities and to provide options for the residents.”
Statewide, the metros that added the highest number of BTR homes in the last five years, beside Dallas, are Houston (1,875 units), Austin (1,096 units) and San Antonio (1,001 units), according to the RentCafe analysis. All four of the state’s major metros landed among the nation’s top 10.
Nationwide, eight of top 10 metros for build-to-rent construction hit 10-year highs in 2022, which was the strongest year on record for this niche.
Phoenix stands out for the largest number of units completed between 2017 and 2022, with 5,473, followed by Dallas, Detroit and Houston. Furthermore, roughly 44,700 homes are now under construction across the country – triple the number of new homes completed in 2022.
While the construction pipeline for BTR is still booming, demand for new homes of this type has fallen nationally from the highs of recent years.
Estimates on build-to-rent construction vary widely based on data source.
But like the broader housing market, new construction of single-family rentals has cooled nationally in recent quarters, with BTR starts in the first quarter of this year 7% lower than the first quarter of 2022. The National Association of Home Builders estimates that in the four quarters ending Q1 2023, 69,000 single-family rental homes began construction, a 17% increase from the 59,000 estimated starts in the four-quarter period prior.
For residents, build-to-rent homes offer space and other perks without the responsibility and home maintenance that comes with a mortgage, Ruggeri said. Some people use build-to-rent as a “stepping stone” between apartments and for-sale housing, while others have no desire to be a homeowner, he said.
“Some residents just don’t want to own a house,” Ruggeri said, “but they don’t want to live in an apartment. It’s a really great opportunity because you have a detached home, you’ve got a garage. You’ve got a private yard for your dog. And you don’t have any maintenance or any of the responsibility that comes along with owning a home.”
Dallas Business Journal, Jun 8, 2023, Bill Hethcock | View Original Article