Posted: February 5, 2024 | Industry News
In recent years, North Carolina has witnessed a remarkable surge in the construction of built-to-rent housing, far surpassing the national average. These innovative single-family homes, offering property management perks and flexibility, have captured the attention of potential buyers who face financial constraints or simply prefer the lifestyle advantages of renting. The impact of this trend extends beyond local communities, as it reflects a nationwide shift in the real estate market. As built-to-rent neighborhoods flourish in the thriving region of North Raleigh and its suburbs, they have become a beacon of hope for addressing the pressing housing shortage, a challenge that has affected various parts of the country. This article explores the rise of built-to-rent housing in North Carolina and its implications for the future of real estate.
With more than 1,000 built-to-rent homes planned or under construction per million residents, North Carolina’s fascination with this housing model is palpable. This figure significantly outpaces the national average of 345, signifying a paradigm shift in the state’s real estate landscape. As reported by the National Rental Home Council, this novel concept has garnered immense popularity among aspiring homeowners who are either unable to afford or find a traditional single-family home. Additionally, there are individuals who consciously opt for rental living due to lifestyle preferences, not being ready for long-term commitments or the weight of a hefty down payment.
This growing trend is further corroborated by the national statistics, with the construction of new built-to-rent homes reaching a record high last year. RentCafe reports that more than 14,500 houses were completed, while three times as many were still under construction. This national surge in built-to-rent construction reflects a broader change in the real estate market, wherein rental living is gaining prominence as an alternative to traditional homeownership.
The heart of North Carolina’s built-to-rent housing boom lies in the Triangle, an area encompassing Raleigh, Durham, and Chapel Hill. The region has experienced rapid population growth, making it an attractive investment destination for developers and property management firms. Built-to-rent neighborhoods have cropped up across North Raleigh and its suburban areas, capitalizing on the region’s vibrant job market, excellent educational institutions, and thriving cultural scene.
According to the Triangle Business Journal, two prominent national builders have recently submitted plans to construct hundreds of built-to-rent homes in North Raleigh and Wake Forest, a clear indicator of the growing demand for this innovative housing solution. As more such developments materialize, the Triangle’s real estate market is poised to experience a transformative shift.
The rise of built-to-rent housing could not have come at a more opportune time. The Triangle, like many other regions across the United States, faces a significant shortage in new construction, leading to a strain on the housing market and driving up both property prices and rents. According to a study, Raleigh alone has a shortage of around 17,000 housing units, a shortfall that has further exacerbated the affordability crisis.
While building more single-family rentals alone cannot fully address the housing crisis, it undoubtedly offers a potential solution to alleviate the supply crunch. Built-to-rent homes bridge the gap between homeownership and renting, providing families and individuals with a comfortable living experience while retaining the flexibility of rental agreements. Moreover, by attracting new investments and construction projects, these homes inject much-needed energy into the local economy.
The appeal of built-to-rent housing lies in its unique blend of benefits that cater to both tenants and investors alike. For renters, these homes offer the allure of single-family living, complete with the freedom to customize their space, access to amenities, and a strong sense of community without the burden of long-term commitments or the complexities of homeownership.
On the other hand, investors find built-to-rent properties an attractive asset class due to their consistent and reliable income stream. These homes typically boast high occupancy rates, particularly in sought-after locations like the Triangle, making them a stable and profitable investment option.
As the built-to-rent trend gathers momentum in North Carolina and beyond, it faces several challenges that must be addressed for sustainable growth. One key concern is the need to strike a balance between high-quality construction and affordability. Providing affordable rental options in desirable locations can be challenging, especially as construction costs rise and available land becomes scarcer.
Additionally, local communities and municipalities must ensure that these developments align with the broader goals of urban planning, transportation, and infrastructure. Creating well-designed, sustainable, and inclusive communities is crucial to fostering a sense of belonging and ensuring the long-term success of built-to-rent housing.
In conclusion, the surge of built-to-rent housing in North Carolina reflects a broader shift in the real estate landscape, as more people seek flexibility and convenience without sacrificing the benefits of single-family living. As the Triangle’s population continues to grow, the demand for such homes is only expected to rise. While it may not be a panacea for the housing crisis, built-to-rent housing offers a promising solution to alleviate supply shortages and provide much-needed rental options for those who desire a modern, community-oriented lifestyle. By embracing this trend and addressing its challenges thoughtfully, North Carolina has an opportunity to lead the nation in redefining the future of housing.