As home prices rise, builders and investors are cashing in on the red-hot rental market.


As home prices rise, builders and investors are cashing in on the red-hot rental market.

According to the Associated Press, homebuilders and investors are increasingly looking to built-to-rent houses as a way to cash in on consumers dissatisfied by a dearth of homes and rising real estate costs.

According to the National Association of Home Builders’ study of U.S. Census statistics, builders began construction on 16,000 single-family houses planned for rental in the third quarter of this year, the highest quarterly total since at least 1990.

According to the Associated Press, the analysis only covers residences that builders want to keep and rent out to tenants, excluding any that were built to be sold to real estate investment trusts or investors who intend to rent out the buildings. The great majority of single-family houses for rent are still controlled by individual homeowners and mom-and-pop investors.

In the third quarter, builders broke ground on just 5.4 percent of all single-family homes that began construction during the same time period. According to the Associated Press, builders confident in the single-family home rental market plan to develop even more rental homes for corporate landlords and investors hoping to tempt people who can’t afford to buy a home.

“Traditional builders are having a hard time doing entry-level housing,” Ali Wolf, chief economist at Zonda Economics, a real estate research firm, said. “In a market where new homes at a suitable price range are few and far between, the build-to-rent space serves its role as entry-level housing.” See the list below for more Associated Press reporting.

For many would-be purchasers, rising housing prices and stiff competition for the few affordable properties for sale are pushing them beyond their financial means. According to the National Association of Realtors, the median price of a previously inhabited U.S. home increased 13.1 percent from a year ago to $353,900 in October. Homes sell in a matter of days after they are listed for sale.

However, these changes have proven beneficial to landlords. According to CoreLogic, rents for single-family houses in the United States increased 10.2 percent in September from the previous year. Apartment rents are excluded from the firm’s single-family house rental data, while condominium and townhome rentals are included.

Rents are expected to rise for at least another year, according to CoreLogic. This is a condensed version of the information.


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