Brief What Is the Build-to-Rent Sector, and Who Does It Serve?
Laurie Goodman, Amalie Zinn
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The Build-to-Rent (BTR) sector, a subset of the single-family rental (SFR) market, is an emerging source of new supply that can help close the housing supply-demand gap. Given the recent and rapid growth of the BTR market, we examined the factors that have drawn institutional investors, homebuilders, commercial multifamily developers, and others to the market. We also provide estimates of the size of the market and its growth potential, describe operation models, chronicle the common features of BTR homes and communities, and offer policy implications for the BTR sector. BTR properties offer reduced capital expenditure burdens compared to traditional SFR homes. They are new and require less maintenance, making them attractive to investors and operators. For homebuilders, BTR provides an alternative disposition strategy, diversifies their business, and reduces risk. Individuals and households benefit from BTR as it caters to those who prefer single-family homes without homeownership responsibilities. The BTR market is expected to continue growing, albeit potentially slower, in the coming years. BTR is not the silver bullet for increasing housing supply, particularly affordable housing. The reality is that nearly 80 percent of homes on the market today are not affordable for households earning median incomes or less. BTR provides capital for a desperately needed increase in housing supply. Policies that encourage and allow more homebuilding overall are crucial to combatting the supply-side shortage, and such policies will help the BTR market as well.

Research Areas Housing Housing finance
Tags Homeownership Housing affordability Housing markets Rental housing
Policy Centers Housing Finance Policy Center