Build-to-rent housing enters the Greeley market

GREELEY — Greeley has long had the luxury of available land, which has helped keep housing prices affordable. But affordability is a cagey creature.

Housing prices in Colorado have appreciated beyond comfort levels for many buyers and renters, prompting the need for more alternatives in the housing market. In Greeley, one of those alternatives that is beginning to enter the market is “build-to-rent” housing.

Greeley has two such communities, following a small but growing trend in other areas such as Phoenix and Nashville, Tennessee. The Greeley City Council recently approved its first such project in a development around the Tointon Academy of Pre-Engineering off 71st Avenue and 10th Street. That project, being developed by Hartford Homes LLC, will be exclusively a build-to-rent community on the south and west side of the school. The development will include a mix of single-family cottages, duplexes, and small apartments above garages, all located within several common lots.

“You’re seeing innovation to deliver multifamily and high-end rental housing, confined to a two-story nature,” Hartford Homes owner Landon Hoover told the Greeley City Council on Jan. 21. “I think it’s downzoning in the density, and we’re really trying to … serve this missing middle.”

Another project, called the Village at Boomerang Ditch, is planned on 49 acres off of 71st Avenue and U.S. Highway 34, with 424 single-family homes for rent. As it would be for an apartment complex, the project would have a central clubhouse and fitness center, a pool, dog park, with the developer contracting out a managed landscaping program. Every home would include a dog-door, as well.

“An easy way to look at this is horizontal apartments,” Hartford Homes’ director of multifamily development David Derbes told the council.

According to the National Association of Realtors, one-year growth in built-for-rent single-family housing starts grew to 90,000 units in 2023 from 81,000 the year before.

“The share of built-for-rent single-family homes grew from 5% in 2021 to 10% in 2023, thus doubling in two years,” NAR reported. “All regions saw an annual increase in built-for-rent. When looking at the data by region, there was a notable two-year growth in built-for-rent single-family homes in the Midwest, where it is now 13% of the market, up from 5% in 2021. The Northeast also saw a two-year rise from 3% to 9%. The increase in the South was smaller, at 9%. The West has the smallest share, at 8%.”

NAR has yet to update those numbers, said Jessica Lautz, deputy chief economist and vice president of research at NAR

The idea is not only about finding a less-expensive alternative to single-family home living. For some developers, it also is about creating a revenue stream.

NAI Affinity CEO Ryan Schaefer has watched this trend with interest. “When builders are constantly on this hamster wheel of identifying a site, going through a difficult entitlement process, constructing homes and selling off inventory, and they have to do it all over again. Depending on the market, that could be a tough way to make a living,” Schaeffer said. “Many are realizing we should take a portion of developing net bandwidth and devote it toward building rental products. As soon as completed with construction, it can generate cash flow out of that.”

Culturally, the shift is in marrying later, and opting to buy homes later. Some could also say the upcoming generations are not so keen to be tied down.  

“It’s more expensive to purchase than ever, obviously,” Schaefer said. “The percentage of renters versus owners is increasing. Traditionally in my career, up until the last few years, we saw pretty reliable two-thirds homeownership to one-third renter, and that’s moving closer to 40% rental. A lot of people expect that will continue to grow with housing prices.”

Greeley mayor John Gates added that there are pros and cons to the trend: The thought behind it is it does benefit us and a lot of communities that need more affordable housing. It’s not homeownership, but to some that’s not feasible financially, and in a lot of cases, people don’t want to own. The big trend with the younger generation is not wanting to buy homes like they used to. They’re perfectly fine renting.”

Greeley council member Tommy Butler remains skeptical of the trend. If it continues beyond a few projects here and there, he said, it might drive the price of housing up even further because there will still be fewer homes on the market for sale.

“I think the market is artificially inflated due to the lack of supply,” Butler said. “When we’re building 250 units and they’re not for purchase, I think it will ultimately drive up the cost of homes, and I think it will make the ability to purchase a home unattainable.

“If we don’t incentivize the building of starter homes, it will never happen,” Butler said.

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