Build-to-Rent Homes Surge as Alternative to Buying & Renting | NPR

The housing market continues to be a source of stress for many, but a growing trend is offering a different path to home – one that doesn’t involve a mortgage. Increasingly, single-family homes are being built specifically for renters, a phenomenon known as “build-to-rent.” About 7% of new single-family houses hitting the market are now designated for rent, a significant increase from a decade ago when fewer than 1% were built for renters. More than 10 times as many build-to-rent homes were completed in the U.S. In 2024 compared to 2014, signaling a substantial shift in the housing landscape.

This isn’t just about providing rental options; it’s about reshaping the idea of what “home” means for a growing segment of the population. For Joanne LaZette of Mesa, Arizona, a build-to-rent home offered a solution that avoided the downsides of both apartments and traditional homeownership. At 87, she wanted the privacy of a house without the maintenance responsibilities.

A Growing Trend Driven by Changing Needs

Companies like NexMetro are leading the charge in build-to-rent communities, focusing on growth areas in the Sun Belt – states like Arizona, Utah, and Ohio – where land is more readily available and populations are expanding. NexMetro CEO Josh Hartmann initially anticipated attracting homeowners who had lost their homes during the 2008 financial crisis. However, the demographic has shifted. Today, many renters are young professionals, pet owners, and individuals who aren’t ready or interested in the commitment of homeownership. Some, like LaZette, are older residents seeking a maintenance-free lifestyle.

The appeal of build-to-rent isn’t solely about avoiding a mortgage. It’s about lifestyle. As Hartmann explains, many residents are “figuring out where they want to live” and prefer the flexibility of renting. This trend is particularly attractive to those who want the space and privacy of a single-family home without the long-term obligations.

Supply and Demand: Addressing the Housing Shortfall

The rise of build-to-rent comes at a critical time. The U.S. Is facing a significant housing affordability crisis. According to Redfin, a family now needs to earn approximately $110,000 annually to afford a typical home, a 29% increase from the median household income. A major contributing factor is a lack of housing supply. Realtor.com estimates the overall housing shortfall to be just over 4 million units in 2025.

Experts like Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute, believe build-to-rent can assist alleviate this shortage. By increasing the overall housing supply, these developments can potentially lower costs for both renters and buyers. “Build-to-rent is a win-win all around,” Goodman asserts.

Overcoming “Not In My Backyard” Concerns

One of the biggest hurdles to increasing housing supply is local opposition to new construction. Concerns about density, traffic, and neighborhood character often lead to resistance against apartment complexes and other multi-family developments. Build-to-rent communities, however, can sometimes overcome these objections. NexMetro, for example, builds smaller, single-story “cottages” that blend more seamlessly into existing neighborhoods. This approach can address concerns about aesthetics and density, making it easier to gain community approval.

Hartmann notes that when residents see the plans for these smaller homes, they are often more receptive. “They see our little homes, our cottages, and they’re like, ‘Oh, yeah. I like that,’” he says.

Shifting Perspectives on Homeownership

Traditionally, homeownership has been a cornerstone of the American Dream. However, a recent survey by the Center for Generational Kinetics found that only 8% of renters in single-family homes define the American Dream as owning a home. This suggests a growing acceptance of long-term renting as a viable and desirable lifestyle choice.

the rental market itself is facing a supply shortage. The National Association of Realtors reports that there were approximately 800,000 fewer single-family rental homes available in 2024 compared to a decade earlier, partly due to investors selling off rental properties to homebuyers. This creates a require for more dedicated rental housing options.

Financial Considerations: Renting vs. Buying

While homeownership offers the potential to build equity, renting isn’t necessarily a poor financial decision. In fact, renting is currently cheaper than owning in most of the 100 largest metros in the U.S., according to LendingTree. Renters who invest the money they save on housing costs can also build wealth.

Mona Gass, a NexMetro renter in Arizona, exemplifies this perspective. She has the financial means to buy a home but prefers the convenience and flexibility of renting. “Am I throwing my money away? Maybe,” she says. “But I don’t have to fix anything.” For Gass, renting is a lifestyle choice that aligns with her priorities.

What’s Next for Build-to-Rent?

The build-to-rent sector is likely to continue growing as demand for rental housing remains strong and the housing affordability crisis persists. While President Trump recently called for restrictions on large investors buying single-family homes, his executive order allows for continued development of build-to-rent communities. This suggests a recognition of the role these developments can play in addressing the housing shortage. The key will be balancing the need for increased housing supply with concerns about investor influence and affordability. More information on the executive order can be found on the White House website.

As the market evolves, it will be crucial to monitor the impact of build-to-rent communities on both rental and homeownership rates, as well as their effect on neighborhood dynamics and housing affordability. The National Association of Home Builders provides ongoing analysis of the build-to-rent market.

the success of build-to-rent will depend on its ability to provide a viable and attractive housing option for a diverse range of residents, while also contributing to a more balanced and affordable housing market. The Urban Institute offers resources on state-level housing policies.