By Blair Sweeney, managing director, Landmark Properties
More Americans are looking for homes even as available housing shrinks. This dynamic is rapidly accelerating the demand for build-to-rent (BTR) communities.
The United States has failed to build as many homes as needed to keep up with population expansion, especially in markets in and around growing cities. Over the past 10 years, U.S. developers have delivered 19 percent less housing than in the previous decade — all while the population and overall demand for housing dramatically increased.
The challenges to adding housing inventory aren’t new. In many areas, it’s become very difficult and expensive to navigate environmental and zoning regulations, putting many otherwise available sites out of reach. Additionally, costs of materials and labor continue to rise. While these constraints existed before the pandemic, COVID-19 pulled these limitations forward.
Emerging in response to the agitated real estate market are single-family homes that are developed specifically as rentals, a relatively new housing product type that combines elements of homeownership and multifamily renting. Unlike institutional investors purchasing existing single-family homes off the market to rent, Landmark Properties is purpose-building homes to combat the nation’s housing shortage, ultimately alleviating pricing pressure in the housing market.
Therein lies the fundamental difference between building to rent and single-family renting.
BTR communities appeal to many pools of potential renters, from young professionals who are starting families to empty nesters who are looking to escape the upkeep that comes with owning a home.
For this property type, the home itself, which typically includes a garage and/or private yard, is the primary amenity. Landmark Properties also provides renters with home maintenance assistance through onsite management in every neighborhood — a key perk for the empty nesters.
In two communities currently under construction, Landmark also offers other amenities, including a 3,700-square-foot clubhouse with a children’s playroom and business center, as well as a pool and a playground. Some BTR communities have dog parks and walking trails as well.
The BTR sector offers the single-family lifestyle experience without the commitment of a 30- or 15-year mortgage. This allows many young professionals to maintain mobility and easily move for job opportunities or to optimize their children’s school district.
In many cases, these young professionals have steady, high-paying jobs, but also have high levels of student loan debt that haven’t allowed them to save enough for a down payment. What’s more, rapidly rising mortgage rates in recent months are further damaging their ability to buy a home.
Our community currently under development in the northern Houston suburb of Spring — branded The Everstead at Windrose — offers three different product types: single-family cottages offering apartment-style floor plans; townhomes with two and three bedrooms; and traditional single-family homes.
For Landmark, entering the BTR market has allowed the company to broaden its national footprint to new markets outside of college towns. In addition, our penetration of this space has leveraged our integrated development platform and decades of experience both building and managing properties.
By targeting sites within 20 minutes of major employment nodes that also have significant retail support, good schools, parks and public amenities, we ensure that our BTR projects are not looking for the “next empty lot” outside of town, but instead the best available property.
The increased density of homes in BTR communities offsets the higher cost required to purchase land in the ideal location, providing the upsizing millennials, downsizing baby boomers and all renters in between more affordable housing options. The goal is to increase the supply of housing, taking much-needed pressure off the residential real estate market.
Landmark Properties Inc. a multifamily and student housing development and management firm based in Athens, Ga.