The Rise of Rent-by-Design: How Build-to-Rent Homes Are Reshaping the Housing Landscape
For decades, the American dream has been synonymous with homeownership. But a quiet revolution is underway, driven by shifting demographics, economic realities, and a growing preference for flexibility. Increasingly, Americans are choosing to rent – not by default, but by design. A new wave of single-family homes are being built specifically for renters, and the trend is poised to reshape the housing market as we know it.
A Growing Market Segment
Approximately 7% of new single-family houses hitting the market are now designated for rent, a significant increase from a decade ago. In 2024, over 10 times as many “build-to-rent” homes were completed in the U.S. Compared to 2014. This isn’t about converting existing properties; it’s about developers intentionally constructing communities designed for long-term renters.
Companies like NexMetro are leading the charge, focusing on development in the Sun Belt – areas experiencing rapid population growth and ample land availability. Ohio and Utah are also seeing a boom in build-to-rent construction.
Why Rent When You Can Own? The Changing Preferences
The motivations behind this trend are multifaceted. For some, like 87-year-old Joanne LaZette in Mesa, Arizona, it’s about avoiding the responsibilities of homeownership without sacrificing the benefits of a single-family home. Others, particularly younger professionals, are prioritizing lifestyle flexibility. They may not be ready to settle down, or simply prefer the convenience of renting.
NexMetro CEO Josh Hartmann notes that many of his renters are pet owners who aren’t yet parents, and are simply “figuring out where they want to live” without the commitment of a mortgage. Even older residents are opting for the ease of renting, preferring to call maintenance rather than tackle repairs themselves.
Did you know? Renting is currently cheaper than owning in the 100 largest metros in the U.S., according to LendingTree.
Addressing the Housing Shortfall
The build-to-rent movement isn’t just about changing preferences; it’s also about addressing a critical housing shortage. The U.S. Is facing a significant deficit in housing supply, with realtor.com estimating a shortfall of over 4 million units in 2025. Build-to-rent homes help bridge this gap by adding much-needed inventory to the market.
Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute, believes build-to-rent is a “win-win,” boosting overall supply and potentially lowering housing costs for both renters and buyers.
Overcoming “Not In My Backyard” (NIMBY) Concerns
One of the biggest hurdles to increasing housing supply is local opposition to new development. Still, build-to-rent communities can often overcome these “NIMBY” (Not In My Backyard) concerns. Unlike large apartment complexes, many build-to-rent homes are designed as smaller, single-story “cottages” that blend more seamlessly into existing neighborhoods.
Hartmann explains that when residents observe the plans for these smaller, more aesthetically pleasing homes, they are often more receptive to the development.
The Financial Implications: Renting as a Wealth-Building Strategy
While homeownership is often touted as the primary path to wealth accumulation, renting doesn’t necessarily preclude financial success. Renters who invest the money they save on housing costs can still build wealth over time. The flexibility of renting allows individuals to relocate for job opportunities or other life changes without the complexities of selling a home.
Pro Tip: Consider investing the difference between potential mortgage payments and rental costs to build long-term wealth.
The Future of Housing: A Hybrid Approach
The future of housing is likely to be a hybrid model, with a mix of ownership and rental options to cater to diverse needs and preferences. Build-to-rent communities will play an increasingly key role in this landscape, providing a viable and attractive alternative to traditional homeownership.
Frequently Asked Questions (FAQ)
- What is “build-to-rent”? Build-to-rent refers to single-family homes that are specifically constructed for the rental market, rather than for sale.
- Who is typically renting these homes? Renters include young professionals, families, and older adults who prefer the flexibility of renting over the responsibilities of homeownership.
- Does build-to-rent help with the housing shortage? Yes, it increases the overall housing supply and can help alleviate pressure on both the rental and homeownership markets.
- Are build-to-rent homes more expensive than traditional rentals? Rental rates vary depending on location and amenities, but they are generally competitive with other single-family rental options.
What are your thoughts on the build-to-rent trend? Share your comments below!
