{"id":185263,"date":"2025-10-20T11:56:54","date_gmt":"2025-10-20T17:56:54","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=185263"},"modified":"2025-10-20T12:11:53","modified_gmt":"2025-10-20T18:11:53","slug":"single-family-rents-are-falling-as-btr-becomes-a-mainstream-trend","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/single-family-rents-are-falling-as-btr-becomes-a-mainstream-trend","title":{"rendered":"Single-Family Rent Growth Slows Down Nationwide as Build-to-Rent Units Flood the Market"},"content":{"rendered":"\n

Single-family rent growth is down, while built-to-rent communities\u2014comprising single-family houses and often funded by Wall Street giants\u2014are up. Is there a connection?<\/span><\/p>\n\n\n\n

Many mom-and-pop real estate investors have long favored single-family homes because they occupy much of America\u2019s real estate landscape and often provide greater financing opportunities and long-term stability. After the housing crash of 2008, investors started to buy single-family houses en masse due to low interest rates and the ease of financing. <\/span><\/p>\n\n\n\n

In the first quarter of 2021, investor purchases of single-family homes peaked at 28% of all investor sales, according to<\/span> Harvard University\u2019s Joint Center For Housing Studies<\/span><\/a>. By the end of 2024, the typical asking rents for single-family homes reached $2,174, up more than 40% from pre-pandemic levels, according to an analysis by<\/span> Fortune<\/span><\/a> <\/em>based on Zillow data.<\/span><\/p>\n\n\n\n

\u201cRent growth has eased, but rents are still too high,\u201d says Orphe Divounguy, a senior economist at Zillow, to <\/span>Fortune<\/span><\/em>. <\/span><\/p>\n\n\n\n

Why Rent Increases Are Dropping<\/span><\/h2>\n\n\n\n

This year, rent increases have dropped significantly nationwide. There are a few reasons for this.<\/span><\/p>\n\n\n\n

An increase in supply<\/span><\/h3>\n\n\n\n

In 2024, developers completed nearly 39,000 units in suburban America, according to<\/span> Point2Homes<\/span><\/a>, a Yardi company, marking an increase of almost 16% compared to the previous year. The rise in supply helped accommodate the 6 million renter households in the 20 largest U.S. metros and surrounding suburbs, which <\/span>increased by 231,000<\/span><\/a> between 2018 and 2023. <\/span><\/p>\n\n\n\n

Built-to-rent has gone mainstream<\/span><\/h3>\n\n\n\n

The increase in single-family rental housing comes in part from Wall Street\u2019s embrace of built-to-rent housing. Packed with amenities but located in the suburbs with the space and land associated with single-family housing, BTR communities have attracted billions of dollars from established <\/span>REITs<\/span><\/a> such as AvalonBay and Invitation Homes. <\/span><\/p>\n\n\n\n

\u201cWe think we\u2019re really in the early stages of what could be a pretty significant, almost new asset class,\u201d AvalonBay chief investment officer Matt Birenbaum told <\/span>The<\/span> Wall Street Journal<\/span><\/a><\/em> in 2024.<\/span><\/p>\n\n\n\n

Approximately 23,000 single-family built-for-rent starts during the second quarter of 2024 was almost 10% higher than the second quarter of 2023, according to the <\/span>National Association of Home Builders<\/span><\/a> (NAHB) analysis of U.S. Census Bureau data.<\/span> <\/span><\/a><\/p>\n\n\n\n

Fixr.com<\/span><\/a> estimated that the total number of BTR home starts nationwide in 2024 was 130,520, representing a 134% increase since 2019. This includes the 90,000 homes NAHB estimated were built to rent in 2024, as well as around 40,520 units sold to investors for rentals. <\/span><\/p>\n\n\n\n

Clearly, BTR homes have struck a chord with renters who prefer single-family living over apartment complexes. \u201cOne clear driver behind the growth of build-to-rent (BTR) is the post-COVID shift in consumer preferences toward larger, more private living spaces; an evolution that has made traditional multifamily housing less appealing for many,\u201d Ryan Kang, co-founder and president of Market Stadium, a company that provides real estate and housing data to investors, told Fixr.com.<\/span><\/p>\n\n\n\n

Single-Family Landlords May Struggle to Compete<\/span><\/h2>\n\n\n\n

Well-capitalized BTR players boasting economies of scale have certain advantages over mom-and-pop single-family investors. These include amenities, organized management, and the benefits of being newly constructed. <\/span><\/p>\n\n\n\n

However, that comes with a price, and smaller investors can have an advantage by keeping nimble and relatively affordable. Also, BTR construction is susceptible to the whims of Wall Street, which has been spooked by <\/span>tariff talk<\/span><\/a>, the cost of capital, and rising construction prices.<\/span><\/p>\n\n\n\n

Forbes<\/span><\/a> <\/em>reported in March that BTR starts fell by 38% between the first quarter of 2024 and the first quarter of 2025. That doesn\u2019t mean BTR has fallen off the radar. Many communities have not yet been completed, and <\/span>Forbes <\/span><\/em>estimates the sector will rebound in 2027 once the current inventory is completed and rented. <\/span><\/p>\n\n\n\n

The Advantages of Investing in a Build-to-Rent Community<\/span><\/h2>\n\n\n\n

In the meantime, there is an opportunity for smaller investors to take advantage of the lull.<\/span><\/p>\n\n\n\n

There\u2019s a lot to like about buying into a BTR community as a passive income opportunity. Here are some of the obvious advantages.<\/span><\/p>\n\n\n\n

Amenities<\/span><\/h3>\n\n\n\n

You are buying into a complex with fitness centers, clubhouses, landscaping and gardens, walking trails, dog parks, and co-working spaces.<\/span><\/p>\n\n\n\n

Choice of units<\/span><\/h3>\n\n\n\n

BTR communities usually offer a selection of homes, including single-family residences, townhouses, and duplexes. <\/span><\/p>\n\n\n\n

The ability to piggyback off community marketing<\/span><\/h3>\n\n\n\n

You can use your stylish BTR website to advertise your vacant unit(s). <\/span><\/p>\n\n\n\n

Scaling up within the same community<\/span><\/h3>\n\n\n\n

If you like the idea of buying at scale, it might be possible to purchase several units within the same community.<\/span><\/p>\n\n\n\n

Easy to outsource management<\/span><\/h3>\n\n\n\n

There is likely one management company that handles all the rental units within a community, making oversight and maintenance easy to coordinate.<\/span><\/p>\n\n\n\n

Disadvantages of Investing in a BTR Community<\/span><\/h2>\n\n\n\n

Any investment comes with risks, and a BTR community is no different. Here are a few of the disadvantages of investing in one.<\/span><\/p>\n\n\n\n

Expense<\/span><\/h3>\n\n\n\n

There is not likely to be much price negotiation if you are picking up a single home in the BTR community. It\u2019s not as if you are finding a house that needs work or through a short sale. In addition, you are also paying for the amenities and prestige of being in the community. <\/span><\/p>\n\n\n\n

While you can charge premium rents, don\u2019t expect your <\/span>cash flow<\/span><\/a> to be too exciting in the early years if you\u2019re getting a mortgage at current interest rates. BTRs are a long-term vehicle and place to park cash rather than leverage it.<\/span><\/p>\n\n\n\n

Market saturation risk<\/span><\/h3>\n\n\n\n

BTRs have been all the rage on Wall Street amongst the big REITs, but it is possible to have too much of a good thing. If the market gets saturated, many units will sit vacant, making it tough to stand out from the crowd.<\/span><\/p>\n\n\n\n

Limited rent increases<\/span><\/h3>\n\n\n\n

Owning within a BTR community means you are restricted in how much rent you can charge compared to the other rentals in the community. <\/span><\/p>\n\n\n\n

Final Thoughts<\/span><\/h2>\n\n\n\n

Rent growth is determined by supply and demand. There has been an influx of single-family home construction in the last few years, and builders are currently hesitant to proceed with more projects until there is some clarity about construction costs.<\/span><\/p>\n\n\n\n

However, rent growth is likely to continue at quite a pace once the current inventory is absorbed, because the U.S. housing market is in an inventory deficit of around 4.7 million homes as of July numbers, according to a recent<\/span> Zillow analysis<\/span><\/a> of census data. <\/span><\/p>\n\n\n\n

Investors need to be strategic about their investment choices, basing them on their investing capability and the amount of time they want to dedicate to a project. If you wish to invest as your full-time or part-time occupation, <\/span>driving for dollars<\/span><\/a>, making multiple offers, attending <\/span>auctions<\/span><\/a>, and getting involved in the rehab process will likely enable you to pick up some deals at discounts in a currently slow market.<\/span><\/p>\n\n\n\n

However, if you want a completely hands-off experience and have deep pockets, buying BTR homes for cash and outsourcing the management and leasing could be the way to go.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Single-family rent growth is down, while built-to-rent communities\u2014comprising single-family houses and often funded by Wall Street giants\u2014are up. Is there a connection? Many mom-and-pop real estate investors have long favored […]<\/p>\n","protected":false},"author":613725,"featured_media":184409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-185263","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=185263"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185263\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/184409"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=185263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=185263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=185263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}