Wall Street firms are investing billions in build-to-rent housing, catering to families priced out of homeownership due to high mortgage rates and record home prices.
Developers like AvalonBay Communities and institutional investors like Blackstone are expanding in this sector, seeing it as a solution to affordable homeownership and rising rental demand across the country.
This new sector is expected to attract millennials and Gen Z homebuyers who have been priced out of homeownership due to an inability to come up with a sizable down payment and hidden costs.
Rental communities are gaining popularity, especially in Sunbelt states, including the Raleigh-Durham region in North Carolina and Austin, Texas region the Wall Street Journal reported.
Build-to-rent homes now account for 10% of single-family housing starts, driven by the affordability gap between renting and owning.
Blackstone is one of the largest owners of single-family homes, making it the largest corporate landlord, with a real estate portfolio worth $60 billion.
Critics have raised concerns about equity and eviction rates under institutional investors like Blackstone, who regularly outbid individual homebuyers in the housing market, according to the U.S. Department of Housing and Urban Development.
"When institutional investors or larger landlords own the rental units, we see an increase in the number of evictions for tenants," Ruth Jones Nichols, the executive vice president of programs at the Local Initiatives Support Corp told the Wall Street Journal. "That's something we really want to keep an eye on."
A September report by a non-profit organization that advocates for regulation of the housing industry claims that Blackstone hiked rent prices at double the market rate in San Diego, allegedly using rent-fixing software.
