REVOLUTIONIZING HOUSING: THE RISE OF BUILD-TO-RENT COMMUNITIES
Michael Vucekovich, Snowdon Residential
December 5, 2022
The quintessential American dream has long been encapsulated by the image of a standalone house: a personal haven with walls distinctly one's own. Yet, this archetype has seen little evolution over the past century, with the introduction of the attached garage being one of the last notable innovations, a change spurred by the rise of affordable automobiles, especially the Volkswagen Beetle which became increasingly popular in the post-war era during the 1950s.
The architecture of homes and the lifestyles they foster are deeply influenced by the technological, legal, financial, and cultural milieu of their times, making any significant departure from established norms a Herculean task. While there have been incremental adjustments in home design to reflect contemporary trends and practical needs—like the space-saving advent of flat-screen TVs and more open-plan living areas—revolutionary changes in the housing industry are few and far between. However, we're on the threshold of such a change today with the emergence of single-family "Build-to-Rent" (BTR) communities.
Understanding BTR
BTR offers a fresh take on single-family living, transforming it from a traditionally owned or individually rented model to a community-oriented, professionally managed, and amenity-rich environment.
Originating in Arizona in the early 2010s, BTR has rapidly gained momentum nationwide. Phoenix, for instance, showcases suburban BTR communities filling up leases at a rate five times faster than urban Class A apartment complexes. Currently, the Southwest boasts 100s of BTR communities with many more in the planning phase. Arizona has become ground zero for the accelerated growth of BTR and a significant pipeline for future development.
This shift toward BTR living reflects a broader generational change in the perception of the American Dream. Access to housing is now prioritized over outright ownership, aligning with a cultural and financial paradigm shift and the growing desire for less commitment in an unpredictable economic landscape. The rise of co-living and a diminishing stigma around renting further underscore this trend.
Drivers of BTR's Popularity
The appeal of smaller living spaces is on the rise, with the median single-family lot size reaching new lows, a trend consistent with shifting demographics. Millennials, in particular, are settling down, forming families, and expressing a preference for minimalism and environmental consciousness, which naturally leads to a demand for less expansive living quarters.
Material possessions have become less of a priority, exemplified by millennials' preference for pet ownership over traditional status symbols like cars. The rise of technology platform that connects riders with drivers for hire and the feasibility of remote living and working have further decoupled the necessity of car ownership from the concept of homeownership, challenging the essential nature of multi-unit garages in home design.
From a financial standpoint, renting is increasingly considered more viable than owning. The aging population seeks hassle-free, maintenance-light living arrangements without sacrificing privacy. Liquidating home equity in favor of renting allows for greater financial flexibility and investment opportunities.
For developers, the BTR segment presents lucrative investment opportunities. Consolidating rental properties into single communities simplifies management, reduces operational costs, and enhances profitability.
Snowdon's Vision for BTR
At Snowdon, we see BTR as an avenue for groundbreaking innovation. We're actively developing BTR communities, with plans for hundreds of units, viewing these projects as platforms for reimagining the construction, financing, management, and habitation of homes.
Our approach aims to refine the BTR industry from the ground up, leveraging Arizona's pioneering spirit. As BTR gains national attention, we're positioned to influence its development and adoption.
We're convinced that BTR will significantly impact communal living, commuting, shopping, working, learning, and saving, complementing Snowdon's technological advancements in site development and resource utilization. These communities not only aim to make housing more affordable but also strive to address the livability gap in American city housing.
As we forge ahead with our BTR initiatives, creating desirable, accessible smarter living spaces, we're excited to share our progress and contribute to a broader understanding and appreciation of this innovative housing solution.
