With the housing shortage driving up costs, single-family rentals are seen as the next opportunity by some investors. But what does this mean for home buyers?
During the pandemic, many people left urban areas for the suburbs. But ask anyone who’s been looking for a home in the last year and they’ll tell you it’s a tough market. In the last issue, we talked about the surge in demand for single-family homes, limited supply, and a new approach to affordable housing – 3D printed homes.
But it’s also worth noting that investors are taking over existing homes and building new single-family homes as rental properties.
Recently, the Zillow Group, which has a large inventory of single-family homes in its home flipping program that it is looking to scale back, agreed to sell about 2,000 homes to real estate investment firm Pretium Partners, according to the Wall Street. Newspaper (WSJ).
Zillow’s remaining inventory could be taken over by other real estate investment firms, raising concerns in Washington that this property foreclosure could further exacerbate the housing shortage.
According to the New York Times, the single-family rental market currently accounts for 6% of new home construction, and that number is expected to double over the next decade. “Many built-to-rent housing projects look like any other planned suburban community, albeit with smaller backyards and houses a bit closer together. Homes often have luxury finishes like granite or quartz countertops and stainless steel appliances.
But it’s not just investors looking for opportunities in single-family home rentals, homebuilders like Lennar Corp. and DR Horton have focused a significant portion of their business on this market, according to WSJ. An article in this newspaper last November noted that “built-to-rent single-family homes are becoming the hottest corner of the U.S. real estate market.”
It will be interesting to see how this trend continues in 2022 and the potential impact not only on the housing sector, but also on remodeling.