The Rise of Build-to-Rent Housing - by Brian Potter
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The Rise of Build-to-Rent Housing<br>Brian Potter<br>May 21, 2026
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A major shift in the housing market in the last several years is the rapidly increasing popularity of “build-to-rent” homes — single-family homes that are built specifically for the purpose of being rented out. According to the National Association of Homebuilders, build-to-rent homes have risen from less than 2% of new housing starts in the 1990s to more than 7% of housing starts today. In 2025, at least 68,000 new single-family housing starts were built to rent (and due to data limitations, the true number may be much higher, 100,000 homes or more).1
The build-to-rent, or BTR, industry has been in the spotlight recently because of a major federal housing bill, the Senate’s 21st Century ROAD to Housing Act. This bill, which is ostensibly designed to stimulate the building of new homes, includes a provision aimed at preventing large institutional investors from owning single-family homes. This provision, section 901, requires institutional investors (companies that own more than 350 single-family homes) to sell any build-to-rent homes to individual homeowners after seven years. Because BTR involves building a home and then retaining ownership of it to rent out, this provision threatens the fundamental business model of the BTR industry. Since the announcement of this provision, funding for new BTR projects has virtually ground to a halt while investors wait to see whether the bill actually passes. Over 100 pro-housing groups, including Berkeley’s Terner Center, the NAHB, and my colleagues at IFP have come out against this provision specifically, on the grounds that it’s likely to significantly reduce housing supply in the short term.<br>Because BTR has quickly become such a large fraction of new home construction and is now in the policy spotlight, it’s worth understanding the origins of the industry and why it has become so popular.<br>Origins of BTR
The modern BTR industry, where developers build entire communities consisting of dozens or hundreds of single-family homes for rent, is a product of the 2008 Global Financial Crisis. Prior to the financial crisis, single-family home rental wasn’t uncommon — in 2005, there were over 8 million detached single-family homes being rented — but the business was mostly the purview of small “mom and pop” operators that owned a relatively small number of scattered rental properties. As late as 2011, no single company owned more than 1,000 rental homes in the US.<br>But the financial crisis shifted the housing landscape. Huge numbers of people lost their homes to foreclosure: foreclosure rates in 2009 and 2010 were four times rates from 2005, and between 2007 and 2010, there were four million foreclosures. The homeownership rate in the US fell from a high of 69% in 2005 to 63% in 2016. At the same time, to rein in the subprime lending that had precipitated the crisis, banks tightened their lending standards, and average mortgage credit scores rose by more than 50 points. In 2003 buyers with a credit score of less than 620 made up 7% of all mortgages. By 2011 that had fallen to essentially zero.<br>The raft of foreclosures and the tightening of lending standards had two simultaneous effects on the housing market.<br>First, they pushed millions of Americans into renting. Between 2010 and 2015 the number of renter households in the US rose by roughly six million, while the number of homeowner households declined by roughly 800,000.
Second, this shift created a huge pool of homes available for purchase at very low prices. Between 2006 and 2010 the value of US homes dropped by 26%, greater than the average decline during the Great Depression. In some markets the declines were even worse: home prices declined by 60% in Las Vegas, and by roughly 50% in Phoenix, Miami, and Tampa.<br>In response to these market conditions — millions of homes available to buy cheaply, and millions of Americans who couldn’t afford to buy them — various real estate ventures were formed to take advantage of the situation. In 2010, the Arizona-based housing investment company Treehouse Group began to buy distressed mortgages in Phoenix and turn them into rental housing. Within a year the company had purchased 11,000 homes. In 2012 Treehouse was acquired by the investment group Blackstone, which turned Treehouse into the single-family rental company Invitation Homes. Today, Invitation Homes is one of the largest home rental companies in the US, with more than 86,000 rental homes across 12 states.<br>In 2012, the same year Treehouse was acquired, Wayne Hughes, founder of self-storage company Public Storage, founded American Homes 4 Rent, which similarly began to buy distressed mortgages and turn them into rental properties. Today, American Homes 4 Rent owns 61,000 rental homes across 24 states. 2012 was also when Tricon, a Canadian real estate company formed in 1988, began to...