The New American Dream

How build-to-rent communities are changing the US housing market

For generations, Americans have celebrated the benefits of owning a single family home. More than just a place to live, homeownership offered us: 

• An appreciating investment with tax benefits; 

• A forced savings tool (via a mortgage); 

• Access to a local community of peers (a.k.a., neighbors); and

• Social proof of financial stability.

But the landscape has changed. Young Americans today aren’t saving. They’re making less, burdened with student loans, and investing spare change in travels and experiences.

And single family homes are not a no-brainer investment. Institutional buyers have created increased competition, financing is expensive, and appreciation in many markets is uncertain. 

So what does a young family do when they still want to experience—but can’t afford to buy—the white picket fence, two-car garage, and the pack of neighborhood kids?  

They rent it, ideally in a community of other renters. 

Which is why “build-to-rent” (sometimes called “build-for-rent”) communities have become one of the fastest growing real estate investment verticals over the past few years. In the US, build-to-rent communities are ground-up, master-planned developments of single family homes with a focus on community-centric amenities (e.g., clubhouses, fitness centers, playgrounds, etc.) and professional management, offering families a rental experience that rivals homeownership. 

Today’s Thesis Driven letter breaks down the rise of single-family build-to-rent communities, covering:

• Trends driving millennial Americans to rent instead of own;

• Why BTR’s value prop beats “scattered site” SFR for renters and investors;

• Active institutional investors in BTR and their recent investments;

• The largest and fastest-growing BTR markets today;

• What the BTR market might look like by 2030 and beyond.