Lifestyle Renters Put a New Spin on The American Dream
Four in 10 renters in large multifamily apartment communities do not envision homeownership as a part of their American Dream, a survey by Entrata recently found. Instead, lifestyle renters are opting for newly constructed, high-quality rental housing that has many of the luxuries of homeownership without its traditional downsides.
What is a Lifestyle Renter?
Renting by choice is an emerging national trend that has gained public attention as more Americans make housing decisions that align with their lifestyle. This new crop of renters is less cost-conscious. Instead, they prioritize housing with amenities that provide convenience and add flexibility to their lives. In recent years, renters by choice have increased in number and influence, boosting demand for single-family rental (SFR) homes, build-to-rent (BTR) communities, and other types of multifamily real estate.
Lifestyle renters skew younger than other rental cohorts. They average about 44 years old, 10 years younger than the average single-family homeowner. The youngest of the group, often from Generation Z, seek modern, well-maintained housing with amenities such as smart technology, private and communal outdoor spaces, and proximity to centers of cultural activity. Millennials, particularly those in their late 20s and early 30s, have also adopted the trend with open arms. Downsizing or relocating Baby Boomers, who prefer low-maintenance rental housing in desirable locations, have also driven SFR demand higher.
Why More Renters are Forgoing Homeownership
The perception of rental housing has been evolving. Approximately 14 million households are now classified as single-family renters. Entrata recently found that the percentage of renters who expect to be lifelong renters climbed 33% in three years to comprise one-fifth of all renters. A convergence of factors has contributed to the shift.
1) Evolving Societal Norms
As more renters call single-family rentals home, the stigma of the “Forever Renter” has eroded. Homeownership is no longer the yardstick by which adulthood is measured. Instead, renters are staying put and prioritizing quality of life. The pandemic also accelerated the modern workplace’s shift to remote and hybrid work, severing the ties between work and home locations. Suburban and rural locations where space and privacy are ample have subsequently become more feasible and attractive locations for renters.
2) Expanded Housing Options
As the size and scope of the SFR sector has grown so have the options it provides to renters. Lifestyle renters can choose from a wide variety of diverse locations, housing types, and amenities. BTR developments have been rapidly expanding into communities across the nation.
3) Lifestyle Flexibility and Convenience
Renters are increasingly forgoing homeownership because it gives them greater flexibility that is not often available to traditional homeowners. For example, renters save themselves time and effort generally reserved for the upkeep of a home. In one recent survey by the National Multifamily Housing Council and Grace Hill, 60% of renters cited maintenance-free living as the biggest benefit of renting.
4) Convenient Locations and Attractive Amenities
Renters by choice seek high-end amenities and vibrant communities that will enhance their living experiences. To attract and retain these quality tenants, BTR developments offer features rarely found in older multifamily developments. Often located near cultural attractions and job centers, BTR is popular with renters who seek access to outdoor spaces, garages, smart technology, and on-site gyms.
5) Investments in Technology and Luxury Amenities
Gone are the days of outdated, walk-up apartments. SFR and BTR developments enhance the tenant experience with modern conveniences, such as high-speed internet. Newly built rental properties seek to intertwine new technology with luxury amenities, like pools and clubhouses, to attract lifestyle renters who have an updated view of The American Dream.
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About the Author
Tres Seippel, MAI, MRICS is Director, Construction Management, at Arbor Realty Trust, a national direct lender and REIT that provides debt for multifamily, single-family rental, and build-to-rent properties. He exclusively funds BTR and SFR deals throughout the U.S. and focuses on the sponsor’s capabilities, the project’s marketability, and the overall financial feasibility.
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