Housing market trends fuel single-family home rental growth – ET RealEstate

LOS ANGELES: Homebuilders and other real estate companies are increasingly betting that would-be homebuyers frustrated with a shortage of homes for sale and runaway prices will settle for renting their slice of the American Dream.

While individual homeowners and mom-and-pop investors still account for the vast majority of single-family rental homes, homebuilders have stepped up construction this year of new houses being built for rent.

In the third quarter, builders broke ground on 16,000 single-family homes slated to become rentals. That’s the highest quarterly total of housing starts for built-to-rent homes going back to at least 1990, according to an analysis of U.S. Census data by the National Association of Home Builders.

The trade association’s analysis includes only homes that builders are going to hang onto and rent out. That excludes homes being built to be sold to real estate investment trusts or investors planning on renting the properties.

While those rental homes accounted for only 5.4% of all single-family housing starts in the third quarter, builders are doubling down on the build-for-rent model, with some already aiming to build more homes for rent for investors or corporate landlords eager to capitalize should potential homeowners continue to struggle to find affordable properties.

“Traditional builders are finding it very hard to do entry level housing,” said Ali Wolf, chief economist at Zonda Economics, a real estate industry tracker. “The build-to-rent space kind of serves its purpose as being entry level housing in a market where new homes at a reasonable price point are few and far between.”

Rising home prices and fierce competition for relatively few affordable homes for sale are stretching the limits of affordability for many would-be buyers. The median price of a previously occupied U.S. home jumped to $353,900 in October, a 13.1% increase from a year earlier, according to the National Association of Realtors. Homes sell within days of being put up for sale.

These trends have been good news for landlords, however. Rents for U.S. single-family homes jumped 10.2% in September from a year earlier, according to real estate information company CoreLogic. The firm excludes apartments from its single-family home rental data, though it includes condominium and townhome rentals.

CoreLogic expects rents to continue climbing through at least the end of this year, citing strong demand, low supply of homes for rent and a strengthening job market.

Recent quarterly earnings from the nation’s two largest publicly traded owners of single-family houses for rent underscore the favorable outlook.

Invitation Homes and American Homes 4 Rent both reported strong third-quarter results, boosted by rising rents and occupancy rates near all-time highs.

BTIG analyst James Sullivan reiterated his “Buy” rating for both real estate investment trusts, or REITs, noting that housing market trends, including the supply chain challenges and rising labor and material costs that are slowing the pace of construction for homebuilders, remain “very favorable” for single-family rentals.

Construction of new U.S. homes was running at a seasonally adjusted annual rate of 1.52 million units as of October, according to the Commerce Department. That’s an increase of 0.4% from the rate a year earlier. But single-family home starts fell 3.9% from September to October and were down more than 10% from last year.

The number of housing starts for built-for-rent houses remains small relative to newly started homes slated for sale. All told, builders broke ground on 47,000 homes for rent over the last four quarters, a year-over-year increase of 17.5%, according to the NAHB. In the same period, builders broke ground on 1.14 million single-family homes.

Some of the nation’s largest homebuilders are looking to take advantage of the demand for build-for-rent homes.

Some sell houses to investors or companies looking to take over communities already packed with tenants. In July, PulteGroup announced a deal to build and sell roughly 7,500 homes over the next five years to Invitation Homes.

D.R. Horton has been building apartment complexes and also single-family rental home communities. This month, it estimated that its rental operations will generate more than $700 million in revenue from rental property sales during its current fiscal year. Horton also said it expects to increase its investment in its rental business by more than $1 billion in the same period.

This spring, Lennar formed a venture with several institutional investors that aims to spend more than $4 billion to buy new single-family homes and townhomes from the homebuilder and, potentially, other builders, and then rent them.

“It’s really evolved over time, but the star of the real estate show today is the build-to-rent space,” Wolf said.



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Housr aims to expand in Pune, Bengaluru and Chennai – ET RealEstate

NEW DELHI: Housr, a co-living space provider, aims to expand in Bengaluru and Chennai in the next quarter. It also aims to launch 6-8 new properties in Pune by 2022, the company said in a media release.

It recently unveiled its co-living space in Wakad, Pune. The rentals here range from Rs 12,000-17,000 for twin sharing and Rs 23,000-30,000 for single occupancy.

Deepak Anand, co-founder and CEO, Housr, said, “With covid regulations getting eased people are joining back their offices and are also migrating to different cities for better opportunities. Pune being among preferred destinations for IT companies and tech start-ups, is showing positive market sentiments and certainly holds massive potential for real estate, co-living and rentals.”

Founded by Anand and Kalpesh Mehta in 2018, Housr is backed by investors Adar Poonawalla through Rising Sun Holdings, Pirojsha Godrej, Abhishek Lodha and Harsh Patodia. At present, it has 20+ properties across NCR, Pune and Hyderabad.



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DDA to launch new housing scheme, offer nearly 15,000 flats – ET RealEstate

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NEW DELHI: The DDA will offer nearly 15,000 flats in its new housing scheme, officials said on Wednesday.

The flats of different categories located at Dwarka, Narela, Rohini and Jasola, among other places will be offered under this scheme and are those which remained “unsold in previous housing schemes” of the urban body, the DDA said in a statement.

The decision was taken during an online meeting of the authority of the DDA, held on Wednesday under the chairmanship of Lt Governor of Delhi Anil Baijal, also the chairman of the DDA, officials said.

The authority has approved launching of a special housing scheme for approximately 15,000 flats, they said.

The DDA said it will soon share further details of the scheme on its website and in leading newspapers and on social media.

Also, the flats are being offered at the old rates or cost in relaxation of the costing policy of DDA, which is updated every financial year based on the appreciation or depreciation of land cost or building, as the case may be, it said in a statement.

“The flats at Narela sub-city are being offered after taking several remedial measures in terms of improvement of infrastructure, security and connectivity on the basis of suggestions, feedback of the allottees, residents of the area,” it said.

The allottees will be eligible for subsidy under PMAY scheme of the central government. If they avail home loan from a bank or financial institution, the statement said.

The entire process from application to allotment and possession is being done through online mode, officials said.

The Delhi Development Authority (DDA) on March 10 had allotted 1,353 flats to people under its housing scheme 2021 through a draw of lots streamed online.

Out of these, 689 flats were surrendered by allottees, nearly 50 per cent of the total inventory under the scheme, with COVID-19 and other factors being attributed by officials for such a larger number of flats being given up.

In late August, the DDA had held a draw for 689 flats under the 2021 Housing Scheme, surrendered by allottees, with a meagre 79 waitlisted applicants being allotted units from this lot.

Among the other decisions approved by the authority included amendment in the DDA policy to mitigate risks of prospective bidders for upcoming in-situ rehabilitation projects, and fixation of pre-determined rates (PDRs) for allotment of land to transport traders at IFC Holambi Kalan, Narela.

According to the provision of Master Plan of Delhi-2021, warehouses of transport traders existing in the Walled City and special areas are required to be shifted to Integrated Freight Complex at Holambi Kalan, Narela, where goods booking and transport agencies offices are permitted activity, officials said.

This proposal will now be sent to Union Ministry of Housing and Urban Affairs for final approval and notification, and will kickstart the process of allotment of plots to transport traders.

According to the LOP, each eligible transport trader will be allotted a 50 square metre plot with a floor area ratio (FAR) of 250, the DDA said.



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Thane: Mhada now plans to make Kalwa affordable housing hub – ET RealEstate

THANE: The Maharashtra Housing and Area Development Authority (Mhada) is planning to turn Kalwa into a hub of affordable housing in the state by constructing one of the biggest economically priced complexes here, cabinet minister Jitendra Awhad informed.

Speaking to he media in Thane last week, he said the department was working out a plan to procure a disputed land belonging to a now defunct engineering company spread over 100 acres in Kalwa (east).

The company had shut down few decades back and the issue of compensating its stakeholders is still pending in Court.

“The land is under litigation but Mhada is ready to settle the dues and purchase the land to construct one of Maharashtra’s biggest housing projects comprising 29,000 flats for the low, middle and high income group. In addition, nearby slum settlements and encroachments could also be brought under the fold,” said Awhad.

He said the idea is to project Kalwa as a place for affordable housing. “We plan to ensure flats that are being sold for over a crore would be available at a fraction of the cost,” Awhad said.

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