Race to the Suburbs Sparks Boom in Rental-House Construction
Race to the Suburbs Sparks Boom in Rental-House Construction
(Bloomberg) -- The Covid-19 pandemic has sent Americans searching for larger living spaces for the work-from-home era, accelerating demographic shifts to the suburbs and attracting new pools of capital to single-family rental homes.
It’s also sparked a mini-boom in rental-home construction. Builders started work on roughly 14,000 rental houses during the third quarter, according to a National Association of Home Builders analysis of census data.
That number -- which includes homes that are built and held as rentals, but not homes that are sold by builders to rental operators -- is up 27% from 11,000 homes in the third quarter of 2019.
While purpose-built rentals represent a small share of total new-home starts, there’s good reason to think that the number will keep growing. The flight to the suburbs is likely to continue, leading Wall Street firms like JPMorgan Chase & Co.’s asset-management arm and Walton Street Capital to make new bets on suburban rentals.
©2020 Bloomberg L.P.