Phoenix is home to a new nationally popular multi-family product: single-family rental housing (BTR) communities. Sometimes referred to as low-density multifamily or horizontal multifamily housing, these BTR developments offer another option for renters who don’t want to live in high-rise multifamily housing but can’t commit or give up on buying a home.
Homeowners in Metro Phoenix have seen their properties disappear as soon as they appear online. Offers kept coming in, and cash buyers only bid while prices skyrocketed. Home prices are up 22% year-on-year.to Zilows house value index data.
Indeed, indicators such as rising inventory levels point to a cooling in the housing market. And when mortgage rates rise, buyers are discouraged from buying. This is because most of your monthly payments are interest. Instead, it pursues other options such as renting or simply leaving it as is.
Brandon Harrington, Managing Director Northmarksaid rising home prices and the current interest rate environment have made it difficult to qualify and buy a home loan, increasing demand for multifamily housing options like BTR communities.
“I am very bullish on multifamily, BTR, and all forms of housing because supply is in short supply,” Harrington explains. “We’ve had a huge population increase, and we’ve had a huge increase in employment. Many of these jobs haven’t come here yet, so I think we’ll continue to see great demand for housing.”
build to rent
Given the lack of consensus on the name of this product, it should come as no surprise that there are many variations in how developers approach BTR. Jacque Petroulakis, Executive Vice President of Marketing and Investor Relations, said: NexMetrosays their community is self-enclosed and built to be leased indefinitely.
“Some people are building scattered homes for rent that are easy to sell. That’s not our platform,” she says. “There are many ways to run this offering. Ours is a professionally maintained, stand-alone wall community for lease, but we also have a few duplexes.”
NexMetro has a large presence in Metro Phoenix, with 23 communities completed or under construction. Under the Avilla Homes brand, the developer offers his 1, 2 and 3 bedroom floor plans along with communal pools and pet-friendly recreation areas.
Another player in this fast-growing segment is curve developmentCurve Development president and owner Nate Pile says the vast majority of Phoenix’s BTR communities are horizontal apartments, which he defines as one-, two-, and three-bedroom bungalow-style units with no garages. It points out that the type
“Our model is centered around creating communities that are either rented or for sale,” Pile continues. “[Our units] is a real detached house with two garages and a true backyard. Our goal is that if you rent it in our community and your family comes to visit, they have to ask if you rent.
Further evidence of BTR’s strength is the entry of Taylor Morrison, one of the largest homebuilders in the US.Mr. Darrin Lowe Taylor Morrisonsays it makes sense for the company to do what it does best: find land, develop soil, build homes and serve customers.
“There are a lot of niche areas that builders and apartment developers are joining, but ours is truly complementary to our core business,” says Lowe. “We are developing a multi-family community that looks like an apartment complex, but lives like a single-family community.”
So Rowe adds that Taylor Morrison’s BTR community is in direct competition with apartments based on product type and strategy. Rather than building apartments over four stories high, Taylor Morrison explains that he’s taking a “low-density multifamily” approach of 10 units per acre.
“[These units] It comes with a dedicated backyard and doggie door lifestyle features,” continues Rowe. “If you lived in an apartment complex, were on the second floor, and had to walk your dog in pajamas on a leash every morning to find a patch of grass, or walk up the stairs to find food. Neighbors above and below if they had to carry goods or were noisy — [BTR communities] solve those problems. “
Tenant by Choice
Not only are the developers building the BTR community differently, but they are also attracting different types of tenants, not just pet owners. According to Petroulakis, NexMetro’s target demographic includes millennial professionals who aren’t ready to own their own home, as well as those recently divorced and living in a single-family home who don’t want to live in an apartment but want a separate one. This includes people in transition, such as those who are reluctant to buy a new home. yet. She also says that sky kids looking to downsize are drawn to maintenance-free living without worrying about unforeseen and costly repairs. Especially baby boomers with fixed incomes.
“It’s a very diverse group of consumers, all renting in the same neighborhood for different reasons, but the most compelling reason is that they want a home lifestyle. We don’t want the typical multi-family product on the market,” Petroulakis explains.
According to Petrulakis, many people in these communities consider themselves renters, meaning they could afford to buy a home but chose not to for one reason or another. It is done.
For Curb Development, the way communities are built means some people are choosing to rent before buying a nearby home. His one of the company’s developments in Orlando, Florida, is part of a large master-planned community with about 3,000 homes.
“We’re getting interest from people who may want to buy, but it’s not the right time because of the pricing, or they may have just moved,” says Pile. “We think it will be a win-win for the master planner and the builder for sale, as the renter will love the area and eventually he may buy a house with three to four lots. ”
A similar calculation applies to Taylor Morrison, says Rowe. “We can build [BTR and traditional single-family homes] We cater to those interested in buying a home in the same or adjacent area of town, or those who want to rent when the time is not right, and they too have a choice,” he concludes. There was meaning in leaning into this space.”