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Rental Home Construction Climbs as Purchase Prices Surge
Investors are betting Americans will keep flocking to spacious suburban living even if they can’t afford to buy
There haven’t been so many single-family homes under construction in the U.S. since 2007, yet many of these new houses won’t be for sale...
Individuals, family offices, pension funds and Wall Street’s boldfaced names are shoveling billions of dollars into build-to-rent projects. Home builders are embracing the business of selling houses wholesale to landlords, and even teaming up with them to build neighborhoods that blur the line between houses and apartment complexes.
“Every institutional investor is considering this space,” said Trevor Koskovich, who heads investment sales at the property-deal adviser NorthMarq and recently represented the seller of five gated rental communities around Phoenix. They fetched $235.5 million from a Chicago investment firm.
Jesting, yes, but I can see how entire communities of purpose built rentals can decline quite quickly. Cheaply built, cheaply maintained to keep profits rolling in, and subject to the vagaries of market whims with no solid pool of homeowners to maintain respectability.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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That's not happening here, where rent is about $3,500-4,000 for a house, and median price to buy is $1.1 million. The home ownership rate is 86%, with most rentals being in the few apartment complexes. The houses for rent are mostly corporate relocation rentals for the big tech employers. This one is for rent at $4,950/month, and is valued at $1.2 million.
Also, an important distinction needs to be made between suburban areas outside of a major city, and a suburban small city or outlying area.
This rental strategy will likely work in the suburbs of Nashville where people still have access to metro jobs, vs. being hours away like I am.
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