While builders have always sold some of their homes for rental purposes, new reports show that this has increased dramatically—and some homebuilders are becoming the landlords themselves.
One San Antonio group, AHV, is putting up 250 rental homes as part of a gated community, with rents ranging from $1800-$2300 per month. Perks of the rental community include parks, pools, clubhouses and a fitness center.
“We basically took an apartment and went horizontal instead of vertical,” AHV founder and CEO Mark Wolf said. “About 93% of the apartment stock consists of studios, one and two bedrooms, very few three bedrooms. We saw a growing need coming out of the downturn, to provide three- and four-bedroom homes to the renter society.”
Wolf, who was involved in multifamily housing during the housing crash, saw a need for rental homes emerging as recently as 2016, and the demand hasn’t dropped off. Homeownership saw its peak in 2016 and has been dipping ever since.
“We think there’s a major shift in the demographics. Empty nesters are done taking care of their homes. They want to downsize, they want portability, mobility in the lease. The millennial household formation, they’re not really dialed into taking care of a home, they want to go out and do the same thing that the boomers are doing, which is enjoy life, not work hard for their house,” said Wolf.
Last year, 43,000 homes were built for rent, the highest number in 40 years. The built-for-rent share has also increased, going to double the recent historical average.
It shouldn’t be a surprise that this change is due in large part to a younger generation that views home ownership as less important, especially millennials. Said one interviewed: “ “If the water heater breaks, you know, I don’t have to replace it. I just call them. I mean, even the air filters, they came and changed my air filters yesterday. I don’t have to worry about all that, that’s extra expense.”
To read more on this topic, check out this article from CNBC.