It's easy to get drawn into the gloom around new-home construction, but if you look toward the horizon, chances are you'll see workers frantically trying to keep up with the demand in the build-to-rent market.
As the broader economy slows, it's impossible to ignore the factors driving a build-to-rent sector that often plays in the shadows of the much larger housing market. Demographics favor renting, there is fundamental demand as many buyers have been priced out of the housing market in the post-pandemic boom, and there's a vast undersupply of rental units.
Regardless of format, the build-to-rent sector is set to deliver 13,981 units in 2022, an 81% increase from 2021’s 7,724, according to Zonda.
That's not to say the sector isn't going to face serious challenges—along with most other business sectors—as the country teeters at the precipice of recession.
After all, build-to-rent builders are still builders and still need to spend the same money to buy materials whose costs have been driven higher by supply chain disruptions. Inflation is increasing the cost of every building aspect, from nails to salaries. And there's competition. Lots of competition. And all of that is assuming all else goes perfectly, which is not a given when there are so many potential landmines around land deals, unexpected expenses, and development execution.
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