Families who have turned their backs on the fight to own their own homes in the overheated housing market say they have no regrets, even if it means being priced out forever.
The proportion of single-family homes built for rent has doubled in two years as companies set their sights on those already fed up with paying a mortgage.
Analysts warn that the trend will only drive up prices for those determined to buy, but the temptation to halve housing costs and shed property worries is proving difficult to resist, with a third of all the rentals are now single-family homes.
Chelsey and Spencer Marks had just spent thousands of dollars repairing the air conditioning in their California home when they realized they would have to buy new windows and a replacement pool pump.
“I thought, I can’t do this anymore,” Chelsey, 41, told Los Angeles Times. “One day I came home and thought, ‘We’re selling the house.'”
Chelsey and Spencer Marks despaired over the cost of maintaining their three-bedroom home in Cathedral City, California, after spending $15,000 on air conditioning alone.
The couple has eliminated their debt and improved their standard of living in a new rental-only subdivision 15 miles up the road from La Quinta.
They moved 15 miles down the road from Cathedral City to SolTerra, a 131-home subdivision built exclusively for rentals, eliminating their credit card debt, increasing their savings and allowing them a vacation in Italy.
“I don’t need to own it to live the life I want to live.”
Mortgage rates have doubled in the past three years and the US Federal Reserve announced Wednesday that the base rate would remain at its highest level in 23 years.
The California Legislative Analyst’s Office estimates that monthly payments to buy a mid-range home have increased 80 percent since the beginning of the decade when taxes, maintenance and insurance are taken into account, making buying a two-bedroom house is twice as expensive as buying a two-bedroom house. rent it.
Erick Carcelén, 47, realized he would pay $6,000 a month to buy his dream home before moving into a four-bedroom, three-bath rental home in Menifee with his wife and three daughters.
“I’d rather pay $3,800 and say, ‘I’m incredibly comfortable,'” he said.
Corporate investors became seriously interested in the rental market after the 2008 credit crisis and are now increasingly building entire rental properties, according to Doug Ressler of commercial real estate firm Yardi Matrix.
“The supply of housing continues to be insufficient, the cost of housing continues to increase and tenants rent longer,” he said.
“Large providers are considering build-to-rent as a legitimate strategy to meet the demand of those who are on a budget and looking to have more square footage than an apartment.”
Erick Carcelen, 47, reduced his monthly housing bills from $6,000 to $3,800 by moving with his wife and three daughters to an upscale rental development in Menifee.
Now his family enjoys amenities including a lap pool, spa and clubhouse in a gated community.
The 300-home property was built exclusively for rental by Tricon Residential, a developer bought for $3.5 billion last month by Blackstone, the world’s largest private equity firm.
Developer Bill Shopoff of Shopoff Realty Investments built the SolTerra property in La Quinta after realizing the huge untapped demand for larger rental homes.
He outfitted his three- and four-bedroom homes with Spanish-style ceilings, colorful mosaics, private garages and state-of-the-art appliances.
Tenants can meet each other at the community pool, clubhouse and landscaped parks.
The property opened last summer with rents ranging from $3,299 a month for a 1,520-square-foot home to $4,460 for those with 2,400 square feet.
“I’m not sure if you didn’t see the for rent sign you would be able to discern the difference,” he said. ‘That is our intention. He lives and feels like he owns a home.
California Assembly Member Christopher M Ward is crafting legislation in an attempt to rein in the new rental giants.
“This seems like a hole in the market that we should try to solve.”
Some of the world’s largest companies have seen strong gains in the distorted real estate market and Blackstone, the world’s largest private equity fund, bought leading developer Tricorn Residential for $3.5 billion last month.
He built the Carcelén house along with 300 others in Menifee and 170 in neighboring Wildomar, with plans afoot for another 493 in Winchester.
But critics have warned that the American dream of homeownership is increasingly unattainable for young families pushed out of a now rental-oriented market.
California Assemblyman Christopher M. Ward is crafting legislation in an attempt to rein in new rental giants, warning that corporate investors “have a significant advantage over a typical California family.”
“They are enabling a new phenomenon in transactions that is inherently uncompetitive,” he added.
But Shopoff says corporate interest is increasing the number of homes being built and allowing people to pursue a lifestyle that would otherwise be impossible.
“It’s interesting that the government wants to restrict capital, but capital only responds to demand,” he added.
The share of single-family homes being built for rent is now at its highest level since data began being collected in the 1970s, but some renters are determined to return to owning their homes.
Roofing contractor Deonte Palm is one of Carcelén’s neighbors on the Menifee estate after moving from an apartment where “we felt like the walls were closing in on us.”
“I thought I couldn’t do this anymore,” Chelsey, 41, said. “One day I came home and thought, ‘Let’s sell the house.'”
SolTerra opened last summer with rents ranging from $3,299 a month for a 1,520-square-foot home to $4,460 for those with 2,400 square feet.
Tenants can meet each other at the community pool, clubhouse and landscaped parks.
The 30-year-old has moved with his wife and new baby into a new four-bedroom building they share with his brother, his girlfriend and their two-year-old son.
The two families are happy to split the $3,400 rent between them while they wait for mortgage rates to drop.
“More space and saving money,” he said.
But Ressler warned that those who move into the rental risk being permanently locked out of the property.
“The rise in housing and mortgage costs is going to persist for a long period of time,” he added.
