In Montgomery County—where the median home price is $340,000, according to the Houston Association of Realtors—there are over 1,000 build-to-rent units, and 500 units being built, according to data from HAR and developers. If homebuying continues to be out of reach for young adults, the market for build-to-rent homes may continue to increase, according to an April 2024 report from RentCafe.
Scott Harper, president at the Conroe/Lake Conroe Chamber of Commerce, said he thinks build-to-rent isn’t going away.
“I think it just gives people another choice to consider before they buy their first house,” Harper said.
Two-minute impact
Houston-area developer The Signorelli Company is developing 129 build-to-rent units in its master-planned community Cielo in Conroe, with an anticipated completion date of late 2025.
Ralph Ireland, senior vice president of real estate and development for Signorelli, said the home rental industry has evolved from companies buying homes from owners; to dealing with homebuilders; to now seeing a rise in build-to-rent communities.
When planning these communities, Ireland said developers take into account different factors, including the number of jobs nearby, how long commutes to those jobs will be and if there are nearby school systems.
“I think we’re learning that each development has its own market, and what ... [renters are] looking for is not necessarily the same from one community as it is in another,” Ireland said.
The details
The rise of the average home price and the associated rise in interest rates “very much” relates to the rise in demand for build-to-rent housing, Ireland said. Although the price of owning a home has risen, the average household wages have not.
This means people who want homes but can’t afford them can still enjoy the benefits of owning a home without having to be tied down to long and expensive mortgages, said Kyle Jefferson, a real estate agent for Living the Dream Realty Group.
“Obviously, I’m a Realtor. I want to sell [houses],” Jefferson said. “But [build-to-rent] does meet a need.”
According to the Houston Association of Realtors’ Q2 2024 Housing and Rental Affordability Report, mortgages are higher than leases.
- “I think that the driver behind [build-to-rent] is the institutional investor looking for different ways to invest in the real estate market. ... This is ... like a new frontier.” —Kyle Jefferson, real estate agent, Living the Dream Realty Group
- “What we’re seeing is that renters of the homes actually have even more of an ownership mentality.” —Ralph Ireland, senior vice president of commercial real estate and development, The Signorelli Company
- “We have increased the amount of builders we have so that we’re able to keep up with the demand.” —Anna Broussard, Houston senior regional manager, Wan Bridge
Although build-to-rent housing growth is prominent in Houston, the rise can be seen more drastically across other U.S. metro areas. From 2018 to 2023, the Houston metro saw a 73% increase in build-to-rent units, whereas Dallas, Atlanta and Phoenix all saw more than a 160% increase, per the April 2024 RentCafe report.
Nationally, 75% more houses for rent were completed in 2023 than in 2022, with Texas being the leading state for these developments with 4,800 houses for rent completed in 2023.
Additionally, 41% of the total number of build-to-rent homes nationwide were built within the last five years, equating to around 68,000 rental homes, according to the report.
“We’re witnessing this niche [of homes built for renters] at its historical peak,” the report states.
Looking ahead, Houston will add around 4,800 new single-family homes for rent by 2026, surpassed only by Dallas and Phoenix, according to the report.
Over 500 units of build-to-rent housing are being developed in the Conroe and Montgomery area, according to HAR and developers for the complexes. The Everstead at Conroe and Cielo Conroe are anticipated to be fully completed by late 2025.
According to a June report from the HAR, if the trend of rising home prices continues, the trend of build-to-rent communities could rise with it.
Texas-based developer Wan Bridge opened a 340-unit build-to-rent community in Conroe in fall 2021, previously reported by Community Impact. Anna Broussard, senior regional manager of Wan Bridge, said the goals for her company have increased more than double since last year.
“Last year, it was about 550 homes,” Broussard said. “This year, our goal ... is 1,200.”
Nichaela Shaheen contributed to this report.
