The staggering rise in home prices in the United States makes it increasingly challenging for Americans to achieve homeownership.

Mortgage rates hovering near 7% have driven up the average monthly mortgage payment to over $2,000.

Despite these high rates, the lack of housing supply is offsetting the impact, with home price gains projected to slow down in 2024.

However, the barriers to homeownership remain significant, as a Zillow report indicates that potential buyers now need to earn over $106,000 annually to afford a home.

The Federal Reserve’s expected interest rate cuts this year offer some hope for relief in the housing market.

However, the build-to-rent (BTR) market is emerging as an alternative housing option.

BTR involves the construction of single-family homes specifically for rent, often in planned communities with amenities.

The BTR market, though relatively new, has seen rapid growth, with 340,000 homes currently available and 50,000 to 60,000 more expected to start construction this year.

David Reynolds, president of Mil Creek, highlights the affordability and appeal of BTR, particularly for millennials and Gen Z who seek more space and privacy than apartments can offer.

However, Mil Creek, a major player in the BTR market, focuses solely on rental properties and does not convert them to for-sale units.

The most significant growth in the BTR market is occurring in Sun Belt markets, such as Arizona, Texas, and Florida, due to strong job and population growth.

The financing for BTR projects typically involves institutional investors who view the sector as a positive investment for expanding the housing stock and meeting the demand for affordable housing.

While construction costs have increased due to rising interest rates, BTR projects typically have an average cost of around $350,000 per home.

The expectation is that interest rates will eventually decline, allowing for refinancing at more favorable terms.

Overall, the BTR market is a growing and innovative option that provides an affordable alternative to traditional homeownership for many Americans.

Rising mortgage rates present a challenge to homeownership.

The text highlights that mortgage rates near 7% and an average monthly payment of over $2,000 make it difficult for Americans to purchase homes.

The lack of housing supply has mitigated the impact of high mortgage rates.

Despite the high rates, home price gains are projected to slow down in 2024 due to a shortage of available housing.

The build-to-rent (BTR) market is an emerging alternative for housing.

The BTR market offers single-family homes for rent, particularly appealing to millennials and Gen Z who seek space and privacy beyond apartments.