As the Federal Reserve’s recent 50-basis point policy rate cut attempts to ease borrowing costs across the economy, the U.S. housing market remains in a complex state of flux. Elevated mortgage rates continue to deter many would-be homebuyers, while the cost of homeownership rises alongside inflation and increasing land prices. Yet, a critical demographic trend is emerging—many Americans are rethinking the value of owning a home altogether. According to a March 2024 report from Entrata, a growing number of renters are opting to stay renters by choice, not by circumstance, embracing the flexibility, financial freedom, and community amenities that renting offers. This shift in the American Dream is causing ripple effects across the Build-to-Rent (BTR) sector, where builders like McGuinn Homes are seizing the opportunity to cater to this evolving mindset.

Renting By Lifestyle Choice

Once seen as a stepping stone on the path to homeownership, renting is now increasingly viewed as a permanent and desirable lifestyle for many Americans. According to Entrata’s "New American Dream" report, 41% of renters say their American Dream has nothing to do with homeownership, and 20% of renters expect to be lifelong renters, a 33% increase from just three years ago. This trend highlights a fundamental shift in how people perceive the benefits of homeownership versus renting.

Today’s apartment residents are reshaping the traditional American Dream," said Adam Edmunds, CEO of Entrata. "Many renters no longer see the need to be tied to a home and a mortgage when apartment communities provide everything they need."

This statement underscores how amenities, flexibility, and lifestyle considerations are becoming central to the housing decisions of younger generations.

Flexibility and Financial Freedom at the Core

The appeal of renting is no longer merely financial.

While high mortgage rates and home prices remain barriers to ownership, 66% of renters in Entrata’s survey said renting fits their current lifestyle more than owning a home. Furthermore, 23% of renters value the location flexibility of renting, and 17% appreciate the financial freedom of not being tied to a mortgage. This shift reflects a broader cultural change where experiences, convenience, and mobility take precedence over long-term commitments like owning property.

The flexibility offered by renting provides an attractive alternative to homeownership, particularly in an era where high borrowing costs and unpredictable economic conditions make the financial burdens of homeownership more pronounced. Builders and developers must acknowledge these lifestyle preferences as they design homes and communities to meet these evolving needs.

Impact: Adapting to Changing Consumer Preferences

For builders like McGuinn Homes, this shift presents both a challenge and an opportunity. McGuinn, which has long been a leader in the Build-to-Rent (BTR) space, has adapted its business model to cater to both renters and buyers. As Wade McGuinn, founder of McGuinn Homes, aptly put it,

The buyer and the renter are the same person."

This philosophy is reflected in McGuinn’s designs, which cater to both demographics without sacrificing quality or efficiency.

We’ve designed the most efficient homes we could imagine," McGuinn explained. "So much so that 90% of our BTR clients throw out their own architecture and use ours."

McGuinn’s homes are designed to appeal to both markets, ensuring that any BTR project can pivot to retail sales if necessary — a key advantage in a fluctuating market where flexibility is critical.

This approach aligns closely with the findings from Entrata's report. Today's renters are often financially stable, with 33% saying they could afford a home in 2024 that meets their needs, but they choose to rent because it better fits their lifestyle. With 56% of renters prioritizing paying off debts over saving for a home and 43% preferring to invest in liquid assets like retirement funds, the financial freedom offered by renting continues to grow in appeal.

Renters as Long-Term Residents

Contrary to the stereotype that renters are transient or less invested in their living spaces, Entrata’s data paints a different picture. Nearly 40% of renters utilize communal spaces in their apartment complexes for social gatherings, and 67% of renters say they have helped their neighbors in their communities. These insights reveal that renters value community and social engagement just as much as homeowners.

McGuinn Homes has leaned into this aspect of renter life by ensuring that their developments foster a sense of community and permanence, whether the residents are renters or buyers.

We would never do a BTR project that wouldn’t retail," McGuinn said, reflecting the company’s strategy to design homes that work equally well for long-term renters or eventual buyers.

By blending quality construction with community-building amenities, McGuinn is addressing the long-term needs of both groups, ensuring that BTR projects remain flexible and attractive even in uncertain economic conditions.

Economic and Market Forces: The Path Forward for BTR

Entrata’s report makes it clear that the rental market is thriving, but the economic landscape remains challenging. As the Federal Reserve’s rate cuts aim to stimulate borrowing, homebuilders and developers must navigate rising land costs, material shortages, and inflationary pressures. McGuinn Homes, however, is prepared for this environment. The company’s ability to cut cycle times in half, coupled with its efficient design and operational flexibility, makes it an ideal partner for BTR developers who need to keep costs down while maintaining high-quality builds.

Additionally, McGuinn’s understanding of local markets and relationships with trade partners allow the company to provide value beyond the construction process.

We’re here. We’re from here. We see these people at church and the grocery store," says Nate Gibson, CEO of McGuinn Homes, reflecting the company’s deep community roots and ability to navigate local regulations, zoning, and permitting challenges with ease.

A New Era for Renters and Builders Alike

Entrata’s "New American Dream" report confirms what McGuinn Homes and other forward-thinking builders have long recognized: renting is no longer a temporary stop on the way to homeownership. It’s a conscious lifestyle choice for many Americans, driven by flexibility, financial freedom, and a desire for community living. As the housing market continues to adjust to economic challenges and shifting consumer preferences, builders who adapt their models are emerging as the operators best positioned to thrive.

By understanding that renters and buyers are often the same people with similar needs, these builders are creating communities that stand the test of time, no matter how the market rolls.