The build-to-rent housing market has grown more than 300% since 2019

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Even before the onset of the pandemic housing boom, homebuilders were constructing more single-family and townhome rental communities. Ultralow mortgage rates and soaring rents during the pandemic, coupled with cash-flush Wall Street firms seeking assets to buy only added fuel to the fire.

Many of those projects are still working their way through the pipeline. Indeed, in 2023 there were a record-breaking 27,495 build-to-rent homes completed, up 75% from 2022 and up a staggering 307% since pre-pandemic deliveries in 2019. That’s according to new report by RentCafe, using data from its sister company Yardi Matrix.

During the pandemic housing boom, build-to-rent investors sought to invest in high-growth markets with favorable demographics, where rental demand would remain strong long term.

That’s why build-to-rent investors targeted Sun Belt markets like Phoenix, Dallas, Atlanta, Austin, and Charlotte. Those five markets saw the most build-to-rent home completions in 2023.

According to Yardi Matrix data, there’s still a pipeline of 45,400 build-to-rent homes expected to be delivered in 2024, 2025, or 2026. Most of those homes are in Sun Belt markets, including Phoenix, Dallas, Houston, Huntsville, Charlotte, Atlanta, and Austin.

Keep in mind that record build-to-rent home completions are, in part, an echo of the pandemic housing boom. Many of these 2023 and 2024 projects were financed or raised when access to capital was still easy.

“A lot of those [2023 build-to-rent] starts were purchased and financed a year or two years ago,” Ivy Zelman, CEO of Zelman & Associates, a research firm that studies the housing industry exclusively, said in a November chat with Oxbow Advisors.

“We expect to see deceleration. It just isn’t penciling now. We’re seeing build-for-rent developers that are trying to sell a lot of communities to builders for the for-sale market because of the challenges with higher cost debt. We see that market right now under a lot of pressure,” Zelman said, adding, “but don’t expect [build-to-rent homes] to go away.”