Phoenix Leads The Nation In Build-To-Rent Home Construction

An analysis of build-to-rent home development in markets across the nation, released by Point2Homes, has revealed that over 110,000 single-family homes are currently under construction throughout the United States for the express purpose of rental, not purchase. The State of Texas boasted an inventory of 21,812 homes in the rental pipeline as of April, with Arizona trailing at 13,972. However, when we broke down the housing markets by city, Phoenix reigned supreme with 13,113 in the Phoenix metro area alone, compared to Dallas, which came in second place with 8,470.

Doug Ressler, Senior Analyst & Manager of Business Intelligence at Yardi Matrix, explained the phenomenon to Point2Homes, saying, 

“More and more build-to-rent (BTR) residents consider themselves renters by preference compared to 2023 (36% in 2024 vs. 27% in 2023). The biggest hurdle to buying a home for BTR residents is high mortgage rates, so BTR homes provide an affordability solution in today’s increasingly expensive housing market.

On average, renting a BTR unit is cheaper than buying a starter home. Recent reports indicate that renting can save one around $1,000 per month compared to buying. This is largely due to high mortgage rates and elevated home prices.

Millennials and Gen Z are increasingly favoring rental options over homeownership due to high property prices and student debt. BTR communities cater to their preferences for mobility, flexibility, and modern amenities.

As urban areas become more congested and expensive, there’s a growing trend towards suburban living. BTR properties in suburban areas offer more space and affordability while maintaining connectivity to urban centers.”

Speaking with Newsweek, Virginia Love of property management company Entrata revealed that the issue is a generational one. A survey from Entrada showed Gen Z Americans, born from 1997 to 2012, have signaled a massive shift toward rental rather than homeownership. She told the outlet, “What the survey told us about Gen Z is that renting is a way of life for them.” 

She added, “While homeownership is something they want at some point in life, they are sort of rewriting their timeline. They don’t feel like they need to follow the whole ‘college, marriage, baby, house, bigger house’ timeline; they can create whatever life they want.”

Bankrate financial analyst Stephen Kates told a different story: “It is significantly more difficult for today’s buyers to purchase a home compared to past decades. One measure of this difficulty is the rising average age of first-time homebuyers. Since 1980, the average age of a first-time buyer has increased from 29 to 38 years old.”

Daryl Fairweather, chief economist at Redfin expressed a cautionary note, telling the outlet: “Renting for longer can delay wealth-building. Owning a home is still the primary way Americans grow their net worth, so every year spent renting is a year without equity growth.”

In May, Arizona State Senator Shawnna Bolick penned an op-ed for National Review, warning that “Across most major American cities, home prices are by far outpacing wages. If states experiencing economic growth want to keep up with demand, they will need to do something about affordable housing.”

As noted by Bolick, ZipRecruiter statistics indicate the average salary in Arizona is pegged at $68,329 annually.

Citing a recent report from Bankrate, she added, “Arizona’s population has grown 6 percent since 2020. According to a recent U-Haul Growth Index, Arizona is in the top ten inbound states for movers. If you were fortunate enough to have lived in Arizona prior to 2020, the average household income necessary to afford an average home was around $71,000. Today, you need an average household income of $122,000 to afford that same home.”