The Cottages at Ingleside in North Charleston, developed by Alabama-based Capstone Communities, is the newest build-for-rent neighborhood to join the Lowcountry lineup.
As the build-to-rent model gains popularity, Capstone is actively looking for new development prospects in South Carolina beyond its North Charleston, Summerville and Myrtle Beach communities.
The model is especially enticing following the last few years as housing prices increased, mortgage rates remained high, and inventory has been low.
In 2023, the Build to Rent (BTR) category grew to 75,000 units nationally — an 87 percent increase year over year and an all-time high. For-sale new builds declined 6.9 percent for the second year in a row nationally, according to national direct lender Arbor.
“It’s a reaction to housing affordability at a more than decade low because of high mortgage interest rates,” said Robert Dietz, chief economist with the National Association of Home Builders.
A National Association of Realtors analysis noted that developers who specialize in other niches, such as family or senior housing, are also “dipping their toes into BTR to diversify their portfolios, since that segment represents a high-performance asset class offering faster lease-ups and lower turnover than apartments.”
Down the line, developers have several options, Dietz said.
“There’s the one where the builder builds it and then sells it almost immediately to an investor,” he said. “There is a version where the builder holds it and operates it for a few years and sells it. … And then there’s ones where they claim to hold it forever, and it depends a lot on how it’s financed. I think we’ll have to wait and see in about three or four years.”
While there’s a nationwide debate over whether the build-to-rent trend is snatching up key properties that could have been available for buyers, Dietz countered that a home is a home. The model converts an owner into a renter, but still adds to the nation’s much-needed housing stock, Dietz noted.
Real Estate Matters in Charleston SC - Gena Glaze 