Single-Family Built-for-Rent Construction Surges Amid High Mortgage Rates

As the housing market grapples with elevated mortgage interest rates, builders are increasingly turning to single-family built-for-rent (SFBFR) homes to meet rising demand for rental properties. According to data from the Census Bureau's Quarterly Starts and Completions by Purpose and Design, analyzed by the National Association of Home Builders (NAHB), approximately 23,000 SFBFR homes were started in the second quarter of 2024. This represents a nearly 10% increase from the same period in 2023, highlighting the growing interest in this niche market.

Over the last four quarters, SFBFR starts totaled 83,000 homes, a significant rise of over 20% compared to the 69,000 homes started in the previous four quarters. The market share for these types of homes, currently averaging 8%, has increased substantially from the historical average of 2.7% between 1992 and 2012. Although the SFBFR market remains relatively small, this growth is notable as builders focus on providing inventory to renters during a period marked by high homeownership costs.

It's important to note that the data only accounts for homes built and held by builders for rental purposes, excluding homes sold to other parties for renting. NAHB estimates suggest that such sales may account for an additional 3% to 5% of single-family starts.

SFBFR homes are becoming a key solution for prospective renters seeking single-family living arrangements, particularly as home affordability remains a challenge for many buyers due to rising interest rates and larger down payment requirements. This trend highlights how the rental market is evolving to accommodate growing demand for more spacious, family-oriented housing in suburban environments.

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PJ Morton's Bolden House Project Faces Uncertain Future After Five Years

In 2019, Grammy Award-winning musician PJ Morton announced ambitious plans to restore the home of jazz pioneer Buddy Bolden in Central City, New Orleans. Morton, along with the Buddy's House Foundation, intended to convert the dilapidated shotgun house into a community recording studio and museum to honor the jazz legend. However, five years later, the project remains unfinished and the future of the iconic property is in limbo.

The house, located near the corner of First Street and Simon Bolivar Avenue, was once home to Bolden, a trumpet player who many historians consider the first true jazz musician. Despite Bolden's profound influence, no recordings of his music exist, making the preservation of his home even more crucial as one of the few tangible links to his legacy. Over the years, the house has received basic renovations, including new paint, repaired stoops, and weatherboards. Most recently, a fresh coat of butter-yellow paint was applied, along with the installation of gutters and the removal of surrounding trash.

But despite these visible improvements, the building remains unoccupied and unused. City officials have flagged the property multiple times for neglect, even threatening fines before the church paid them off to retain ownership. While Morton and his foundation initially showed great promise, the project's progress has been slow, and emails and phone calls to PJ Morton and the Greater St. Stephen church have gone unanswered.

The Bolden house, now valued at $250,000, continues to be at risk as natural threats like termites and vines creep into the structure. The house's future remains unclear, raising concerns about whether the long-delayed renovation will ever come to fruition.

As of now, the legacy of Buddy Bolden remains in limbo, with hopes that PJ Morton's vision for a tribute to the jazz legend will eventually be realized.

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Mortgage Rates Trending Are Down

Mortgage rates have been a major point of focus in the housing market, as they directly affect affordability for prospective buyers. Over the past few weeks, there's been some promising news on this front—rates have been steadily declining. According to recent reports, mortgage rates have fallen to levels not seen since February, thanks to favorable economic data, lower inflation, and reassuring comments from the Federal Reserve. Freddie Mac recently confirmed this decline, creating a more optimistic outlook for buyers who have been waiting for rates to drop.

If you've been holding off on buying a home due to high mortgage rates, this dip may provide the perfect window of opportunity. However, it's important to manage expectations. Many experts agree that the ultra-low 3% rates of the pandemic are a thing of the past. As Greg McBride, Chief Financial Analyst at Bankrate, explains, "lower doesn't mean we're going back to 3% mortgage rates. . . the best we may be able to hope for over the next year is 5.5 to 6%." Even so, this recent dip could still offer significant savings compared to earlier in the year when rates were higher.

But before waiting to see if rates drop further, it's important to consider how the relationship between rates and demand might affect your buying strategy. Historically, as mortgage rates decrease, buyer demand increases. Many potential buyers who paused their search during higher-rate periods will likely re-enter the market, potentially increasing competition. As a recent article from Bankrate points out, if rates dip below 6%, more buyers will likely flood the market, potentially driving up prices and sparking bidding wars.

For buyers who have been sitting on the sidelines, now might be the ideal time to re-engage in the housing market. The current dip in rates gives you a chance to act before demand spikes. By moving quickly, you could secure a home at a favorable rate, avoiding the rush that might follow if more buyers decide to jump back in. The key takeaway: if you're ready to buy, now is the time to strike while mortgage rates are trending down and competition remains relatively low.

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Mortgage Rates Hit a Two-Year Low: Is Now the Right Time to Buy?

As of Monday, September 16th, average 30-year fixed mortgage rates have dropped to 6.12%, the second-lowest level seen in almost two years. This decline represents a significant reduction from the 7.5% peak in April, giving homebuyers an extra $30,000 in purchasing power since July, or around $200 in monthly savings. Median monthly housing payments also dropped to $2,534, the lowest since January, making this a more favorable time for those considering buying a home.

In addition to falling mortgage rates, the Federal Reserve announced a surprising 50 basis point (0.5%) rate cut during their September 18th meeting, with further gradual reductions of 25 basis points expected in the coming months. While this could lead to a slight uptick in mortgage rates in the short term, the long-term trend suggests that rates will continue to decrease. This drop has been driven primarily by steadily improving inflation, which has seen rates fall by over 1.10% since the same time last year.

The current market landscape is also favorable for buyers as housing inventory has risen by 20% compared to last year. More sellers are entering the market, offering increased options for prospective buyers. The question many buyers are now asking is whether they should purchase a home now or wait for further rate cuts.

For those with the financial means, it may be an ideal time to buy before competition among buyers intensifies. While waiting for rates to fall further might seem tempting, there is a risk of prices increasing as more buyers flood the market. Locking in a mortgage rate at these levels allows buyers to take advantage of lower monthly payments and build equity faster over the loan term.

Despite the favorable conditions, it's essential to stay cautious, as the housing market has been unpredictable. For instance, higher mortgage rates in the past two years have not significantly reduced home prices as expected. Many sellers have held onto their homes due to lower pandemic-era mortgage rates, further reducing supply and sustaining high prices. Although mortgage rates are falling, home prices remain near record highs, especially in areas with high demand like Texas and Upstate New York.

For those wondering if rates will fall further in 2024, experts suggest that while gradual declines are likely, significant reductions are not expected. The current rates already reflect much of the anticipated Fed cuts, and mortgage rates may stabilize as inflation continues to improve.

For home sellers, the recent drops in mortgage rates could lead to increased competition. Buyers who were previously priced out due to high rates are likely to re-enter the market, boosting demand for available listings. This is an opportune moment for sellers to prepare for more interest in their homes.

If you're ready to buy, locking in a mortgage rate today could be a wise move, as rates haven't been this low in two years. With lower rates, you can qualify for larger loans or reduce your monthly payments, maximizing your investment. The longer you wait, the more competition you may face, so now could be the best time to act if you're financially prepared to purchase a home.

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