Weekly Update: BTR Boom - Rentals Outpace Ownership

Build-to-rent communities continue to rise as a prominent trend in real estate, offering professionally managed rental homes that appeal to both younger families and empty nesters, while multifamily built-for-rent construction starts are up nearly 11% from last year. Additionally, housing starts for buildings with five or more units showed significant growth despite challenges, and single-family rental housing is seeing faster growth than apartment rentals in Canadian cities, driven by high housing costs and mortgage access issues.

Build-to-rent (BTR) communities are emerging as a significant trend in real estate, combining elements of apartment complexes and mixed-use developments to offer professionally managed rental homes with amenities. This new asset class has grown to comprise 12% of the US market in 2023, driven by factors like rising home prices and changing preferences among both younger families and empty nesters who want the benefits of single-family homes without the responsibilities of ownership.

Multifamily built-for-rent construction starts increased to 83,000 units, up nearly 11% from the previous year, with rental units comprising 94% of total multifamily construction starts. The average size of these multifamily units decreased to 1,027 square feet, reflecting the continued dominance of rental properties in the multifamily construction sector.

Housing starts for buildings with five or more units increased significantly in April 2025, jumping 28.8% year-over-year to 420,000 units, though developers face ongoing challenges from potential tariffs and financing difficulties. While apartment starts showed strong growth, overall housing construction declined slightly year-over-year, with deliveries and properties under construction both showing decreases compared to the previous year.

A joint venture between Hillside Commercial Group and Landmark Homes' Livmark Communities is developing a 45-unit build-to-rent phase at The Bend at Highland Meadows in Loveland, Colorado, scheduled for completion in fall 2026. The project represents the second phase of development, complementing an existing 198-unit multifamily community, and will feature townhomes and stacked ranch units with Greystar managing the property.

Major Wall Street firms are significantly increasing their investments in single-family rental homes and build-to-rent communities, driven by high mortgage costs that make renting more attractive than buying for many Americans. The trend is supported by strong renter demand, with institutional investors like Blackstone, AvalonBay, and JP Morgan backing large-scale build-to-rent developments while targeting millennials, empty nesters, and former homeowners seeking more space and flexibility.

The residential real estate market is showing mixed signals, with existing home sales down 0.5% in April and inventory levels at a five-year high, while national home prices are expected to decline 1.1% by year-end 2025 with mortgage rates remaining around 7%, though rental markets are showing some strength with single-family rent prices increasing 2.9% year-over-year in March.

Single-family rental housing is experiencing faster growth than apartment rentals across major Canadian cities, with Census data showing SFR households increasing from 25.5% to 26.4% between 2016-2021. This trend is particularly notable in cities like Toronto and Vancouver where over 42% of new dwellings are being converted to rentals, driven by high housing costs and limited mortgage access that have made renting a long-term reality for many Canadians.

Sean Dobson, CEO and CIO of Amherst, discusses insights from managing 50,000 single-family rental homes across 33 U.S. metropolitan areas in this episode of the Top of Mind podcast. The conversation explores how institutional investors have impacted the housing market and examines key challenges around housing affordability, with Dobson sharing data-driven perspectives from Amherst's $15B real estate investment platform.

The U.S. multifamily rental market showed strong performance in Q1 2025, with Northern New Jersey leading rent growth at 7.7% year-over-year, followed by Miami at 7.2% and Long Island at 5.7%. The market continues to normalize while benefiting from increased rental household formation and a growing trend toward lifestyle renting.

According to the article, rent growth has slowed significantly since 2020-2023, but may be poised for a major rebound in 2025-2026. This potential bounce back is driven by an expected drop in multifamily housing supply, with projected completions falling from 533,000 units in 2024 to just 250,000 units in 2026, while rental demand is expected to remain relatively steady.