The rise of build-to-rent housing

From the article:

A major shift in the housing market in the last several years is the rapidly increasing popularity of “build-to-rent” homes — single-family homes that are built specifically for the purpose of being rented out. According to the National Association of Homebuilders, build-to-rent homes have risen from less than 2% of new housing starts in the 1990s to more than 7% of housing starts today. In 2025, at least 68,000 new single-family housing starts were built to rent (and due to data limitations, the true number may be much higher, 100,000 homes or more).

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The modern BTR industry, where developers build entire communities consisting of dozens or hundreds of single-family homes for rent, is a product of the 2008 Global Financial Crisis. Prior to the financial crisis, single-family home rental wasn’t uncommon — in 2005, there were over 8 million detached single-family homes being rented — but the business was mostly the purview of small “mom and pop” operators that owned a relatively small number of scattered rental properties. As late as 2011, no single company owned more than 1,000 rental homes in the US.

But the financial crisis shifted the housing landscape. Huge numbers of people lost their homes to foreclosure: foreclosure rates in 2009 and 2010 were four times rates from 2005, and between 2007 and 2010, there were four million foreclosures. The homeownership rate in the US fell from a high of 69% in 2005 to 63% in 2016. At the same time, to rein in the subprime lending that had precipitated the crisis, banks tightened their lending standards, and average mortgage credit scores rose by more than 50 points. In 2003 buyers with a credit score of less than 620 made up 7% of all mortgages. By 2011 that had fallen to essentially zero.

The raft of foreclosures and the tightening of lending standards had two simultaneous effects on the housing market.

First, they pushed millions of Americans into renting. Between 2010 and 2015 the number of renter households in the US rose by roughly six million, while the number of homeowner households declined by roughly 800,000.

Second, this shift created a huge pool of homes available for purchase at very low prices. Between 2006 and 2010 the value of US homes dropped by 26%, greater than the average decline during the Great Depression. In some markets the declines were even worse: home prices declined by 60% in Las Vegas, and by roughly 50% in Phoenix, Miami, and Tampa.

In response to these market conditions — millions of homes available to buy cheaply, and millions of Americans who couldn’t afford to buy them — various real estate ventures were formed to take advantage of the situation. In 2010, the Arizona-based housing investment company Treehouse Group began to buy distressed mortgages in Phoenix and turn them into rental housing. Within a year the company had purchased 11,000 homes. In 2012 Treehouse was acquired by the investment group Blackstone, which turned Treehouse into the single-family rental company Invitation Homes. Today, Invitation Homes is one of the largest home rental companies in the US, with more than 86,000 rental homes across 12 states.

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This large-scale acquisition and transformation of single-family homes into rental properties was encouraged by the federal government, as part of broader efforts to keep the housing market from collapsing completely. In 2012 the Federal Housing Finance Agency launched the REO-to-Rental Initiative pilot program, which “allowed pre-qualified investors to bid on large portfolios of foreclosed properties owned by Fannie Mae.” Roughly 1,800 homes were sold to investors under this program. And in 2017, Fannie Mae backed a billion-dollar loan to Invitation Homes for the purposes of purchasing rental properties.

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Building new rental homes had several advantages compared to acquiring existing homes. Being new construction, they typically had much lower maintenance costs than existing homes, and they could be designed by the developer with an eye towards minimizing maintenance and overheads. And because they were clustered together, they were somewhat easier to manage than purchased rental houses that might be spread across a wider area.

As the housing market recovered and the pool of single-family homes available for purchase at favorable prices dwindled, many of the large home rental companies began to experiment with their own BTR strategies. American Homes 4 Rent began work on its first ground-up rental community in 2016; today it owns more than 14,000 BTR homes, with essentially all new home acquisition coming through BTR. Invitation Homes began purchasing BTR homes in 2021 in a partnership with homebuilder Pulte, and as with American Homes 4 Rent essentially all its home acquisition now comes from BTR. Pretium Partners, which owns over 80,000 single-family homes under its “Progress Residential” umbrella, formed a $1 billion BTR venture in 2021. Some companies, such as American Homes 4 Rent, opted to do all their BTR development work in-house, while others preferred to partner with existing homebuilders, buying new houses that developers constructed in bulk.

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Today, BTR is still a small segment of the overall housing market: CBRE estimates that there are about 350,000 BTR units in the US, which is just 1.5% of the overall single-family home rental market. But it’s a rapidly growing segment of the US housing market — or was, until this recent Senate bill.

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“Build-to-Rent” has become synonymous with single-family homes built specifically to be rented out, typically in communities of a few dozen to a few hundred rental homes, but within that category companies offer a broad range of different products. BTR generally gets broken down into several major subcategories (though some use slightly different ones): single-family detached, single-family attached, and horizontal multifamily. These categories exist on something of a spectrum of “very similar to conventional single-family homes” on one end and “very similar to conventional apartment buildings” on the other.

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But while affordability issues seem to be the primary driver of BTR’s popularity, there also seems to be some fraction of residents that simply prefer renting over owning, due to a desire for less maintenance or simply because they don’t perceive owning a home as a major life goal. CBRE, NAHB, and NexMetro all mention various demographics of “renters by choice” (such as retirees), an analysis echoed by several BTR developers I talked to. As construction of BTR communities continues, this growth might create a sort of reinforcing cycle: more people move into rental housing, which makes it more accepted, which draws even more people in, and so on.