Single-family rentals to the rescue: How these communities are filling the gap for people who can’t afford to buy homes

When developer Steve Patron was planning a neighborhood of townhouses in Winslow Township, Camden County, a decade ago, he expected to sell the new homes.

But after running the numbers and looking at demand, “it just made more sense to do it for rent,” said Patron, managing partner at Harvestate Group, based in Somerset County.

The company owns the 105-unit Enclave at Winslow. And it’s developing another rental community of 54 townhouses in Glassboro, Gloucester County. Construction is set to start in a few months.

“This whole idea of building a single-family community for rent is pretty new,” Patron said. “I liked the idea of doing something different.”

Across the country, the concept of building whole neighborhoods of professionally managed, single-family homes for rent has exploded in recent years, largely because home ownership has gotten less affordable.

Historically, single-family homes built for rent made up about 3% of total home builds, according to the National Association of Home Builders. Now, the share is closer to 10%.

Growth really started taking off in the last few years, according to John Burns Research & Consulting, a California-based firm that tracks build-to-rent communities with at least 25 single-family homes. About 104,700 homes were built in these communities in 2024.

Most build-to-rent construction is happening in the southern half of the country. The Phoenix area has the most units under construction — more than 13,100, according to an analysis from rental home portal Point2Homes published in January.

There aren’t as many build-to-rent communities in the Philadelphia area, but they’re growing here, too.

Less than 10 minutes from the Enclave at Winslow is Winslow Cross Creek, an income-restricted rental community of 166 townhouses with another 30 under construction.

In Plumstead Township, Bucks County, just outside Doylestown Township, the Heritage Summer Hill development has 75 townhouses for rent. Darby Townhouses is an income-restricted community in Darby Township, Delaware County, with 172 townhouses for rent.

Residents of build-to-rent communities “span all life-stage groups, all income ranges,” said Maegan Sherlock, the senior research analyst for consumer insights at John Burns.

They include:

Build-to-rent residents are paying to be in a “cohesive community of all rentals that are professionally managed,” said Jeff Kottmeier, senior vice president of consulting at John Burns. “A lot of times, tenants will pay a premium for the build-to-rent.”

Developers say a lot of their renters are coming from apartments and are used to amenities such as gyms, clubhouses, and pools. Some build-to-rent communities have lots of shared amenities, and others have few or none. It depends on the market, the demographics, and the competition.

Although living in a build-to-rent community can be an option for a household that can’t afford to buy, that doesn’t mean rents are all inexpensive. Prices depend on the market and the developer.

At the Enclave at Winslow, the average rent is about $2,800 per month, Patron said. Each unit has 2½ bathrooms, a one-car garage, and a back patio. End units have three bedrooms, and middle units have two bedrooms and a den.

The Enclave is across from an elementary school, next to a development of owner-occupied townhouses, and across from a neighborhood of owner-occupied twins.

For some build-to-rent residents, their homes are stepping stones to home ownership. In a 2024 survey of roughly 7,600 build-to-rent residents by John Burns’ New Home Trends Institute, 56% of residents who plan to eventually move planned to buy a single-family home next.

Patron said the Enclave at Winslow has renters who stay for a while, but “we do lose probably half our tenants when they find a place they want to buy.”

Builders consider factors such as demographic and market trends, the financial environment, and affordability when thinking about whether to build for sale or rent.

Robert Dietz, chief economist at the National Association of Home Builders, stressed the difference between communities of homes built to be rentals and investors buying existing homes to rent them out.

Build-to-rent “represents new home supply,” he said. “Housing economists universally agree that we have a housing deficit.”

Single-family homes built as rentals expand housing options, he said. The market is like a ladder, he said, and “single-family build-to-rent represents another rung on the ladder.”

Developers of these communities in the Northeast tend to build duplexes and townhouses instead of detached homes, since the latter require more space.

Build-to-rent “can be a way of building a community, providing housing that is rental housing, that might not look and feel like that eight-story apartment building,” said Chris Nebenzahl, vice president of rental research at John Burns. “And so you’ve got the opportunity for rental, but it might be a little bit easier to get approved” by a municipality.

That’s the strategy taken by Hans Lampart, the Vineland-based president of Eastern Pacific Development, Brookfield Construction, and EPAC Property Management. Lampart’s companies build and then manage income-restricted apartments and single-family homes for rent across South Jersey.

In his growing Winslow Cross Creek development, three-bedroom townhouses go for $1,446 per month. “We provide housing for people who have limited options,” Lampart said.

“I’ve chosen [build-to-rent] because I think it helps the municipality accept multifamily. It just looks like a neighborhood. It doesn’t look, quote-unquote, affordable,” he said. “It fits in the community better.”

Developing and managing build-to-rent communities makes more sense in some places than others.

In the Northeast, competition for land is fierce and building is expensive. So when a builder has to decide what to do with a property, “a lot of times, quite simply, the numbers don’t work to make it a rental. It’s better for them if they have it, to develop it and sell it or do multifamily,” Kottmeier at John Burns said.

Areas with more build-to-rent communities have more available land, including in Texas, Nevada, and Florida.

Interest rates are another factor. Developers who hold on to their build-to-rent communities get construction loans for the years it takes to build them and then get permanent loans to be paid off over decades, like a mortgage on a house. Volatile interest rates make it hard to predict final costs.

“That’s really what we’re struggling with today is, how do we get our arms around where rates are going to be two to three years from now?” Patron said.

When Richard S. Van Osten, executive vice president of the Builders League of South Jersey, first heard about the build-to-rent trend, he was skeptical there was a market for it. He knows it’s picked up steam in other places, but “it’s hard to say whether it’s gonna be a trend” in South Jersey, he said. “There’s something about owning your own home. But then again, it’s hard for people to get into that right now.”

Build-to-rent is not popular among the league’s members.

“When we’ve looked at it, it all comes down to the cost,” said Sam Paparone, president of the organization and vice president of operations at Paparone New Homes, based in Camden County. “For what we think rents would go for, it wouldn’t make sense to build to rent, because the rents wouldn’t cover the costs,” from initial construction costs to ongoing ones, such as taxes.

Apartment builders have more units to help them cover these costs, he said.

And demand for new homes for sale is still high in South Jersey because of the limited supply of existing homes on the market and folks looking to move from Philadelphia to the suburbs, Paparone said. So homebuilders are busy.

But if builders can make it work, he said he sees build-to-rent as “a great thing overall, because it does give people an option.”