Dallas-Fort Worth is dominating a fast-growing segment of the housing market that’s quickly expanding throughout the region.
The metro area ranked No. 1 in single-family rental home completions in 2022, according to a new report from housing data firm Yardi Matrix and sister company RentCafe. Builders finished a record 2,773 houses in dedicated communities of single-family rental homes in the region last year.
Both apartment developers and traditional homebuilders have turned to build-to-rent communities as a way to offer homes in what look like traditional subdivisions to renters. In North Texas, these communities have found their way into fast-growing cities such as Garland and Terrell and sprawling master-planned communities as a new housing option.
Bryan Lawrence, a vice president of consulting in Dallas for John Burns Research & Consulting, said the single-family rental trend is still in early stages, and that the product type will continue to have a significant presence in the housing market moving forward.
“Given the affordability challenges caused by a limited supply of housing and the Federal Reserve’s efforts to combat inflation by hiking rates, which in turn affects mortgage rates, more and more households are turning to [build-to-rent] as a viable alternative to renting an apartment, renting a traditional single-family home in a homeowner-dominated neighborhood or even buying a home,” Lawrence said.
Within D-FW, construction wrapped up on 441% more single-family rentals in 2022 than in 2021, according to RentCafe.
The region’s supply of homes in build-to-rent communities, totaling 7,843 units, was the second largest in the nation behind Phoenix through the end of 2022. This year, 4,350 build-to-rent units are under construction in D-FW, also just behind Phoenix.
The nation’s largest homebuilder, Arlington-based D.R. Horton, is selling $1.5 billion of homes to rental investor Pretium Partners, Bloomberg reported June 1. The homes were planned as rentals rather than for-sale inventory, according to The Wall Street Journal.
The home construction giant has been rapidly investing in the space, and owned $3.3 billion of rental inventory as of March, according to financial filings.
The most active areas for construction of build-to-rent communities are the North McKinney and Melissa areas as well as Fort Worth, specifically the 114 and 287 highway corridors and southwest Fort Worth, according to Ted Wilson, principal of Dallas-based Residential Strategies, which tracks housing construction activity throughout the region.
“With the tight supply of listing inventory in the resale market, there simply has not been enough product to meet the rental demand,” Wilson said. “Detached, newly constructed rental units are a favorable alternative to garden apartments in many suburban markets.”
